Alexander Malt has circulated a draft of his paper “Methodological Individualism: True and False” in which he aims to provide a Hayekian alternative to praxeology. In this paper I will address Malt’s foundational arguments related to praxeology. I find those foundational arguments to fall short in three important respects:

1. Malt’s critique of methodological individualism rests on the notion of action without judgement—the possibility of creating social objects unintentionally. However, methodological individualism, when properly understood, does not imply that all social objects are intentionally created. Methodological individualism is a theoretical procedure in which phenomena are examined from a first-person perspective.

2. There are two distinct strains in Mises’s praxeological thought: 1) Praxeology as chain-of-logical reasoning, and 2) Praxeology as study-of-mental categories or as study-of-the logical structure of the mind. Malt critiques the former but overlooks the latter.

3. In his writings, Hayek briefly discusses the possibility of two different praxeological methods: 1) Praxeology as tautological transformation of intentional objects, 2) Praxeology as the study of mental categories. Malt overlooks Hayek’s own praxeological suggestions not realizing that they constitute a praxeological alternative to Hayek’s spontaneous/emergent order program.

Methodological Individualism

Malt’s primary thesis is that methodological individualism is faulty because some social phenomena cannot be traced back to the intention of individual actors. He writes:

Hayek’s example of a path illustrates how the actions of individuals produces a structure which, first, those individuals did not intend to bring about and, second, influences those individuals’ subsequent actions:

At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways. Human movements through the region come to conform to a definite pattern which, although the result of deliberate decisions of many people, has not been consciously designed by anyone. (Hayek 2010, 104)

Such a statement is at odds with the praxeologist’s reduction of complex social and economic phenomena to individuals and actions. Emergent social structures exert downward causation; they are not epiphenomena. Consequently, if there exist emergent economic institutions then explanation might be irreducible to individuals and actions, and must instead incorporate these institutions as basic elements.

Malt argues that it is possible for an individual or group of individuals to bring about a social phenomenon or social entity, such as a path, without intending to do so. Thus, methodological individualism, which would attempt to explain a path as something purposely created by individual actors, cannot be fruitfully applied.

However, Malt has misunderstood the principle of methodological individualism. Methodological individualism is not a procedure in which one attempts to conceive every social entity as purposely created by individual actors. Rather, methodological individualism is more accurately understood as a procedure in which one conceives every social attribute as a function of an individual attributor. The difference between these two conceptions can be easily illustrated.

In procedure #1, I observe a person making a path or contributing to the making of a path. I ask that person whether he intended to make the path. The person answers in the negative, and this proves that actors can create a social entity without purposely intending to create it.

This procedure entails an observer (actor 1), an observed person (actor 2), and an observed object (the path). The scientist (actor 1) attempts to provide a scientific explanation of the relationship between two social objects which he himself observes: actor 2 and the path. In this procedure, both actor 2 and the path are assumed to exist, objectively, as objects in spatial nature, in the same way that mountains and boulders are assumed to exist in spatial nature. Here, the social scientist does not examine the nature of his own observation of the two social objects he observes. Instead, he assumes, if only implicitly, that he is observing an objective situation.

If the issue of subjectivity arises, the scientist will assign the phenomenon of subjectivity to the relationship between actor 2 and the object. He will explain the subjective aspects involved in actor 2’s perception of the object. The scientist leaves the nature of the relationship between himself and the two social objects (actor 2 and the object) unaddressed. This creates the impression, typically unstated and unacknowledged, that the social scientist is observing and experiencing an objective world, while the actor observed by the social scientist is observing and experiencing a subjective world.

This way of looking at things is part of a specific scientific worldview. According to this worldview, both the social scientist and the physical scientist look out into the space in front of them in choosing their objects of study. The distinction between social science and physical science is that the social scientist chooses to study the social objects he observes in nature, while the physical scientist chooses to study the physical objects he observes in nature. Both sets of objects, the social and the physical, are assumed to exist in the objective sense; they are located in the space surrounding us; they have spatial coordinates. Social scientists isolate a specific subset of these objects, and this distinguishes their field of study from that of the physical scientist.

Now let us consider a second procedure. In procedure #2, I do not begin with the assumption that the social objects I observe exist objectively in nature. Instead, I begin with an analysis of my first-person experience of social objects as such. I observe another person or a path. How did I identify one object as an entity that possesses a consciousness similar to my own, and how did I identify another object as an entity that I may use for walking from one location to another? Do I identify them by their physical, objective, or intrinsic qualities? Or do I identify them by some other means? Hayek asked these same questions and arrived at the following important insights:

Are the human actions which we observe, and the objects of these actions, things of the same or a different kind because they appear physically the same or different to us, the observers—or for some other reason?

Take such things as tools, food, medicine, weapons, words, sentences, communications, and acts of production—or any one particular instance of any of these.

It is easily seen that all these concepts (and the same is true of more concrete instances) refer not to some objective properties possessed by the things, or which the observer can find out about them, but to views which some other person holds about the things.

[These concepts] can be defined only by indicating relations between three terms: a purpose, somebody who holds that purpose, and an object which that person thinks to be a suitable means for that purpose. If we wish we could say that all these objects are defined not in terms of their “real” properties but in terms of opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are. (IEO-59/60)

The insight that the attributes of objects are a function of the individual “attributor” is one of the central insights of Austrian economics. The Austrian School of economics was founded on the insight that an object’s “value” is not an intrinsic quality of the object, but rather a function of the one who values it (i.e., the notion of subjective value). Malt quotes a similar insight of Descartes.

…if I look out of the window and see men crossing the square, as I just happen to have done, I normally say that I see the men themselves…Yet do I see any more than hats and coats which could conceal automatons? I judge that they are men. And so something which I thought I was seeing with my eyes is in fact grasped solely by the faculty of judgement which is my mind.

In other words, the attribute “manness” is supplied by Descartes in this example. Just as value is a function of me, the individual valuer, the attribute “manness” of the man I observe is a function of me, the observer. Mises makes the same insight:

We can see a crowd, i.e., a multitude of people. Whether this crowd is a mere gathering or a mass (in the sense in which this term is used in contemporary psychology) or an organized body or any other kind of entity is a question which can only be answered by understanding the meaning which they themselves attach to their presence. And this meaning is always the meaning of individuals. Not our senses, but understanding, a mental process, makes us recognize social entities. (HA-43)

In his book Minds, Brains and Science, John Searle expounded on the mental character of social phenomena:

So why can’t such social phenomena as wars and revolutions be systematically related to molecule movements in the same way that the relations between caloric inputs and fat deposits are systematic?

To see why this can’t be so we have to ask what features social phenomena have that enable us to bind them into categories. What are the fundamental principles on which we categorise psychological and social phenomena? One crucial feature is this: For a large number of social and psychological phenomena the concept that names the phenomenon is itself a constituent of the phenomenon. In order for something to count as a marriage ceremony or a trade union, or property or money or even a war or revolution people involved in these activities have to have certain appropriate thoughts. In general they have to think that’s what it is. So, for example, in order to get married or buy property you and other people have to think that is what you are doing. Now this feature is crucial to social phenomena.

‘Money’ refers to whatever people use and think of as money. ‘Promise’ refers to whatever people intend and regard as promises. I am not saying that in order to have the institution of money people have to have that very word or some exact synonym in their vocabulary. Rather, they must have certain thoughts and attitudes about something in order that it counts as money and these thoughts and attitudes are part of the very definition of money.

The defining principle of such social phenomena set no physical limits whatever on what can count as the physical realization of them. And that means that there can’t be any systematic connections between the physical and the social or mental properties of the phenomenon. The social features in question are determined in part by the attitudes we take toward them. The attitudes we take toward them are not constrained by the physical features of the phenomena in question. Therefore, there can’t be any matching of the mental level and the level of the physics of the sort that would be necessary to make strict laws of the social sciences possible.

The main step in the argument for a radical discontinuity between the social sciences and the natural sciences depends on the mental character of social phenomena. (MBS-77-79)(emphasis added)

As we can see in these important passages from Hayek, Descartes, Mises, and Searle, there is an important sense in which we can trace the attribute of any given object to a person(s) who assigns or perceives that attribute. We could perhaps go even further and assert that in principle there is no attribute that cannot be traced to an attributor. This procedure, in which every attribute is traced to an attributor, is a type of methodological individualism. It is a procedure in which every phenomenon that is described or depicted is explicitly described or depicted from a first-person point of view. Attributes of objects or of phenomena are not conceived as having an independent existence; they are instead conceived as implying an “attributor,”—an agent that “holds” or “supplies” the attribute in question. If we consider the insights of the four authors listed above, we can see that all of them have to do with the way the social object appears from the point of view of the actor who observes or interacts with the object. The passages are clear in conveying that every social object X is social object X because it is regarded as such by some individual(s). None of these passages imply that every social object must be traced back to a person or group who intentionally created it.

Thus, we are dealing with two different conceptions of methodological individualism. In the conception of methodological individualism employed by Malt, social objects are conceived, implicitly, as having an objective, physical, existence in nature. We may refer to this conception as “objective” methodological individualism. According to this view of things, the social scientist studies the relationships between certain “social” objects found in nature (people, works of art, coins, markets, etc.), while the physical scientist studies the relationships between different, non-social objects found in nature (mountains, boulders, clouds, etc.).

In the second conception, which we will refer to as “subjective” methodological individualism (SMI), social objects are not conceived as having an objective, physical existence. Rather, social objects are conceived as a function of the individual who observes, perceives, or discerns those objects. Specifically, social objects are considered phenomena of consciousness, or “subjective” phenomena.

The first conception is essentially a physical interpretation of social science. The implicit assumption is that social science studies physical objects of a certain kind. The second conception is essentially a mental interpretation of social science. In this “epistemological” or “phenomenological” conception, social science studies the way social phenomena are constituted in conscious experience.

The mental interpretation of social science was central to Mises’s social thought. Unfortunately, during the transition to Rothbardian and Hayekian Austrian School social thought in the second half of the twentieth century, the mental interpretation of social science was abandoned in favor of the physical, objective, interpretation. In the Rothbardian/Hayekian approach, reference to the attributing/perceiving agent is generally absent, implying that the social object or phenomenon in question has an independent, objective existence. Malt’s critique of praxeology assumes a physical or “objective” interpretation of social phenomena, and Malt rightly assumes that the Rothbardians he critiques share this same objective interpretation.

Why was subjective methodological individualism abandoned? Probably because people held (and hold) one or more of the following beliefs about it.

1. SMI is solipsistic. It denies the existence of other minds, and denies the objective existence of things. Therefore, this approach is misguided as a scientific approach, and immoral or inhumane in its implications.[1]

2. SMI studies what is in a person’s mind but does not study reality. This kind of mental study may give us information about mental processes, but gives us little information about reality.

3. Descriptive study of mental phenomena is not hard science, but is more akin to “philosophy.” It can only produce unprovable speculations about thoughts and perceptions and cannot give us actionable cause-and-effect information about the way the world works.

Rather than attempting to refute these mistaken beliefs individually, it may be more instructive to explain subjective methodological individualism positively. Briefly, the positive case for SMI is the following:

In addition to the tangible and perceptual aspects of the things we experience and observe, there appear to be fundamental “laws” governing or ordering their appearance. Important examples of fundamental laws are the physical law(s) of conservation and the economic law(s) of supply and demand. One reason fundamental laws are important is that knowledge of them instructs us on what things to avoid doing if we want to achieve a specific goal. For example, if I want to touch the ceiling in my house, I will not attempt to rise toward the ceiling by placing my hands under my feet and pulling upward. Eliminating certain methods of trying for goal X from the outset allows me to try other methods of achieving goal X which potentially have a chance of success.

Contemporary wisdom holds that the fundamental laws are laws of the “universe.” In our contemporary scientific culture, we believe that the fundamental laws are essentially laws of the physical, spatial, universe, and so that is where we search for them. By contrast, those who subscribe to the “epistemological” approach to science, hold that the fundamental laws are in fact laws of consciousness, or they hold that discovering and understanding the fundamental laws is best accomplished by conceiving these laws as laws of consciousness (See: Edington, The Philosophy of Physical Science, 1978)

If the fundamental laws are laws of consciousness, or best understood as laws of consciousness, this implies they are to be found by examining the structure of consciousness from a first-person perspective. This is why Mises writes:

The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of human action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without.(HA-64)

Thus, subjective methodological individualism is simply a proposed methodological procedure for better understanding the fundamental regularities (laws) we intuit as manifesting in social and physical phenomena.

Historically, there have been two important barriers to the intensification of subjective methodological individualism:

1) When social thinkers arrived at the insight that social attributes are a function of the attributing agent, they generally spoke of this in terms of the relationship between an observed actor (A) and the object of the observed actor’s action (X). In this conception, the social thinker took the point of view of the observer, and noted that from the “subjective” point of view of observed actor A, object X is object X not because of its physical properties, but instead because A believes, or thinks, or intends it as such. In framing the situation this way, the social thinker left unanswered the question of his own observation of A and X. In leaving this question unanswered, the impression was given that the social thinker himself was observing two social objects that had an independent, objective, existence. He failed to apply the principle he was enunciating—the subjective nature of social phenomena—to his own observation of A and X. He thus fell victim to Pareto’s fallacious analytical construct in which the person assumed to have greater knowledge (the social scientist) speaks from an objective point of view, while the person assumed to have lesser knowledge (the observed person) speaks merely from his own “subjective” point of view.[2] This faulty construct resulted in a scholarly tendency or habit, in which the subjective nature of social phenomena was acknowledged in isolated passages of a text, while the remainder of the text was written under the implicit assumption that social phenomena were objective phenomena. The subjective nature of social phenomena was acknowledge in passing, but was not rigorously adhered to as a principle of social-scientific investigation.

2) On the most fundamental level, physical science is founded on the distinction between two observations. We distinguish between object or event 1 and object or event 2 by means of the observable characteristics of 1 and 2. Physical science is founded on a comparison of the characteristics (in the most broad sense) of two or more states of affairs.

Social science in the Misesian sense is not founded on the comparison of two states of affairs. It is founded on the relationship between a state of affairs facing an actor (1), and that actor’s want or desire (0) for a different state of affairs. The two entities (the situation facing the actor (1), and the actor’s desire (0) for a different situation) are not temporally separated; they are contemporaneous (copresent).

The situation facing the actor, as such, is assumed to have perceivable or observable characteristics. The situation facing the actor is something he can see, hear, feel, imagine, etc. This situation stands in relation to the actor’s desire for a different situation. It is here that a fundamental theoretical problem arises. If we conceive that the actor’s desire for a different situation has observable characteristics (attributes that he may perceive or observe—for example, some kind of urge that he feels, some kind of mental image that he forms, etc.), and if a comparison of these two entities (the situation and the desire) forms the structural foundation of our system, we have now inadvertently set our system on a physical basis (the comparison of the characteristics or attributes of two observable entities). Thus, since we assume that the situation facing the actor has observable characteristics, and since the basis of our system cannot be a physical basis (i.e., cannot be the comparison of the characteristics of two entities), the actor’s desire for a different situation cannot be conceived as an entity having distinguishable (perceivable, observable) characteristics or attributes. In contrast to the observable and perceivable situation that faces me, the actor, my desire that the situation be different must be conceived as fundamentally unobservable and fundamentally unperceivable.

Thus, the structural difference between physical science and social science may be reduced to the following general formula. Physical science (in the classical sense) is founded on the notion of two observations where both observed events are conceived as taking place in nature independent of any particular consciousness. The foundation of social science consists of one observable and one unobservable, and both taken together are considered constitutive of consciousness, not independent of it. The entirety of my perceivable/observable current situation, coupled with my unperceivable desire for a different situation, constitutes the entirety of my consciousness or conscious awareness.

Because the difference between physical science and social science was not clearly defined on an epistemological level, most social theory was unknowingly undertaken on the basis of a physical epistemology. This in turn compromised the position of social scientists as they tried to differentiate social science from physical science while sharing the same epistemological foundation. The making of physical distinctions—higher/lower, more/less, internal/external, nearer/farther, sooner/later, etc.—is the essence and foundation of physical science.[3]

These two obstacles—1) the subjective nature of social phenomena from the point of view of the social scientist himself, and 2) the epistemological differentiation of physical science from social science—served to inhibit the extension of the epistemological or phenomenological approach to social phenomena.

Methodological Individualism: Conclusion

Methodological individualism does not reduce to a claim that all social objects are the intentional creation of individual actors. Rather, methodological individualism is a procedure in which the various aspects of the social and physical world are conceived as perceptions and observations of perceiving and observing agents. Methodological individualism is methodological subjectivism. The alternate method, in which the phenomena of the physical and social world are conceived as having an independent existence detached from any perceiving or observing agent, is a form of objectivism. When social analysis is objectivistic, methodological individualism loses its clear meaning

Praxeology as Chain-of-Logical Reasoning

In his paper, Malt addresses a particular conception of praxeology: praxeology as chain-of-logical reasoning. This is the familiar “deductive” conception of praxeology in which praxeology consists of a foundational premise or axiom (the so-called “action axiom”) and the deductions proceeding from that axiom. As explained in Malt’s paper “A chain of reasoning starting from a self-evident truth and proceeding deductively via a sequence of valid arguments, will produce certain knowledge.”

The deductive conception of praxeology is definitely part of Mises’s philosophy as evidenced by the following passage provided by Malt:

He who wants to attack a praxeological theorem has to trace it back, step by step, until he reaches a point in which, in the chain of reasoning that resulted in the theorem concerned, a logical error can be unmasked. But if this regressive process of deduction ends at the category of action without having discovered a vicious link in the chain of reasoning, the theorem is fully confirmed. (Mises 1962 71-2)

Thus, it is fair to characterize Mises as a rationalist and as a proponent of deductive social science.[4] But this is only part of the story. Throughout Mises’s writings we find a second strain of thought in which Mises advances the thesis that the regularity in social phenomena is a function of the logical structure of the human mind.

For as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind. (U-65)

Human knowledge is conditioned by the structure of the human mind. If it chooses human action as the subject matter of its inquiries, it cannot mean anything else than the categories of action which are proper to the human mind and are its projection into the external world of becoming and change. All the theorems of praxeology refer only to these categories of action and are valid only in the orbit of their operation. (HA-36)

The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without. (HA-64)

Thus, there are two distinct strains of Mises’s praxeological thought. Mises’s praxeology is part deductive rationalism and part phenomenology. That Mises is a phenomenologist can easily be seen by comparing the definition of phenomenology to an important passage from Human Action.

The discipline of phenomenology may be defined initially as the study of structures of experience, or consciousness. Literally, phenomenology is the study of “phenomena”: appearances of things, or things as they appear in our experience, or the ways we experience things, thus the meanings things have in our experience. Phenomenology studies conscious experience as experienced from the subjective or first person point of view. (http://plato.stanford.edu/entries/phenomenology/)

Compare to:

We can see a crowd, i.e., a multitude of people. Whether this crowd is a mere gathering or a mass (in the sense in which this term is used in contemporary psychology) or an organized body or any other kind of entity is a question which can only be answered by understanding the meaning which they themselves attach to their presence. And this meaning is always the meaning of individuals. Not our senses, but understanding, a mental process, makes us recognize social entities. (HA-43)

Mises believed there were two possible paths to praxeological knowledge. In the epistemological approach, one begins with, and proceeds from, an analysis of the structure of our knowledge.[5] In the “rational arguments” approach, one begins with a given scientific concept or proposition and examines its logical validity.

There are two different ways of setting methodological and epistemological investigations upon a secure foundation. One can attempt to reach solid ground by undertaking to deal directly with the ultimate problems of epistemology. This procedure would no doubt be the best if it offered any promise of success, so that one could hope to find truly firm ground at that deep level. However, one can also take another path, by starting from the definite concepts and propositions of science and verifying their logical character. It is evident that cognition of the ultimate foundations of our knowledge can never be attained in this manner. But neither does the first way offer such a possibility. On the other hand, the second way protects us from the fate that has befallen most investigations that have been concerned with the methodological and epistemological questions of economics in recent years. These investigations became so badly bogged down in the difficulty of the ultimate problems of epistemology that they never reached the point where they could deal with the logical problems of sociology, which are comparatively easier to solve. (EP-70)

As we can see, Mises believed that the epistemological approach to knowledge is superior, in principle, to the rational arguments approach, but he thought that the epistemological approach had little chance of practical success. In practice then, Mises was forced to resort to the rational arguments approach in his own writings in economics and praxeology. This explains the two distinct strains in Mises’s praxeological writings. On the one hand, Mises continually refers to mental categories and to the structure of the human mind. In this sense, Mises is an epistemologist or phenomenologist. On the other hand, Mises insists on the use of deductive or rational arguments. In this sense, Mises is a rationalist.

The passage above also helps to explain why Human Action, Mises’s treatise on economics, does not contain an example of an economic law deduced step by step from the category of action.[6] Mises asserts that the attempt to deal directly with the ultimate mental categories (such as the category of action) is likely to become bogged down and never reach the point at which the problems of economics and praxeology can be addressed. Therefore, Mises did not deduce economic laws directly from the category of action. Instead, when Mises turns to explain the important laws of economics (The Law of Marginal Utility, The Law of Returns, The Ricardian Law of Association) we see that he employs the “rational arguments” approach. He advances various rational arguments in support of the logical validity of these laws. Mises uses the same rational arguments approach in explaining the relationship between credit expansion and the business cycle, and in explaining the problem of socialist calculation. He does not demonstrate how these economic laws or economic phenomena are deduced from the category of action.

Malt’s critique focusses solely on the rational arguments conception of praxeology, a conception from which theoretical subjectivism, epistemology, and phenomenology have been removed. What remains is essentially an objectivist, “Rothbardian” conception of praxeology. Malt entirely ignores epistemological praxeological theory. In this sense, not much has changed from the 1940’s when Mises wrote “The importance of phenomenology for the solution of the epistemological problems of praxeology has not been noticed at all.” (MO-19)

Hayek’s Praxeological Alternative to Spontaneous/Emergent Order Research

Malt, citing Hayek, argues that the rationalist/individualist approach to social phenomena makes it difficult to understand or study social phenomena such as spontaneous orders.

Hayek (1946) argued that adopting the rationalist conception of individuals makes it difficult to understand spontaneous orders and non-compulsory conventions, and stated that Mises’ characterisation always made him feel uneasy (1978, xxiii).

If the goal is to better understand spontaneous orders and similar social phenomena, a praxeologist may reasonably ask: What about the analytical or phenomenological methods of study that Hayek discusses in his two important essays “Economics and Knowledge” and “The Facts of the Social Sciences”? In these essays, Hayek envisages at least two different types of praxeological social analysis: the tautological/intentional, and the mental/categorical.

Analysis by Tautological Transformation of Intentional Objects

In his essay “Economics and Knowledge,” Hayek describes a type of deductive social analysis which he refers to as the Pure Logic of Choice. This “analysis by tautological transformation” is a method in which one begins with a “datum” present from the point of view of an actor (a fact, object, or situation), and then proceeds to draw analytical conclusions from this assumed datum. According to Hayek, the propositions obtained in this type of analysis are a priori true because they are simply “tautologies—those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start.” The method of analysis Hayek has in mind is subjective in nature. As he explains:

It is important to remember that the so-called “data,” from which we set out in this sort of analysis, are (apart from his tastes) all facts given to the person in question, the things as they are known to (or believed by) him to exist, and not, strictly speaking, objective facts. It is only because of this that the propositions we deduce are necessarily a priori valid and that we preserve the consistency of the argument.

What Hayek means is that the analysis will draw an analytical conclusion from an assumed fact as that fact appears from the point of view of the actor (A), not as that fact appears from the point of view of one who observes that actor (B). For example, if from A‘s point of view he is moving toward location X, we may analytically conclude that he is moving away from some location Y. The analytical conclusion that A is moving away from some location Y cannot, however, be deduced from assumed datum present to observer B if from B‘s point of view A is not moving but stationary. Therefore, Hayek reiterates:

“data” meant those facts, and only those facts, which were present in the mind of the acting person, and only this subjective interpretation of the term “datum” made those propositions necessary truths. “Datum” meant given, known, to the person under consideration.

In “The Facts of the Social Sciences” Hayek expounded further.

From the fact that whenever we interpret human action as in any sense purposive or meaningful, whether we do so in ordinary life or for the purposes of the social sciences, we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons, there follow some very important consequences; namely, nothing less than that we can, from the concepts of the objects, analytically conclude something about what the actions will be. If we define an object in terms of a person’s attitude toward it, it follows, of course, that the definition of the object implies a statement about the attitude of the person toward the thing. When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, that the second can be used to buy something with, and that the third can be understood—and perhaps many other things.

Thus, Hayek presents a methodologically individualistic type of social analysis in which we draw analytical conclusions from facts, objects, or situations that we assume as given for the actor in question. Of course, if we may draw analytical conclusions starting from social objects such as food, money, or words, as Hayek suggests, we may also draw analytical conclusions starting from other social entities such as paths, prices, or markets. In principle, we should be able to apply this method to any social entity, including spontaneous or emergent social entities.

Analysis by Mental Categories

In “The Facts of the Social Sciences” Hayek describes a second method of social analysis which we may call the epistemological method. The epistemological method is based on the thesis that the regularity we experience in social and physical phenomena (and which science tries to conceive in terms of scientific laws) is a function of the structure of our mind or consciousness. Phenomena repeat in regular patterns because our mind or consciousness is “structured” in a certain way. Hayek explains:

If we consider for a moment the simplest kinds of actions where this problem arises, it becomes, of course, rapidly obvious that, in discussing what we regard as other people’s conscious actions, we invariably interpret their action on the analogy of our own mind: that is, that we group their actions, and the objects of their actions, into classes or categories which we know solely from the knowledge of our own mind. We assume that the idea of a purpose or a tool, a weapon or food, is common to them with us, just as we assume that they can see the difference between different colors or shapes as well as we. We thus always supplement what we actually see of another person’s action by projecting into that person a system of classification of objects which we know, not from observing other people, but because it is in terms of these classes that we think our selves.

Hayek then continues:

The claim to which I have referred follows directly from this character of the first part of our task as a branch of applied logic. But it sounds startling enough at first. It is that we can derive from the knowledge of our own mind in an “a priori” or “deductive” or “analytic” fashion, an (at least in principle) exhaustive classification of all the possible forms of intelligible behavior.

Yet when we reflect that, whenever we discuss intelligible behavior, we discuss actions which we can interpret in terms of our own mind, the claim loses it startling character and in fact becomes no more than a truism. If we can understand only what is similar to our own mind, it necessarily follows that we must be able to find all that we can understand in our own mind.

The idea Hayek is discussing here is relatively simple. Consider the “categories” happiness and unhappiness. When I locate or identify another person, in Hayek’s words, I “supplement” what I actually see (a body, clothing, etc.) with a “projection” of the categories happiness and unhappiness. I assume that “happiness” and “unhappiness” somehow exist with the person I see in front of me. As Hayek explains, the happiness and unhappiness that I attribute to the person in front of me do not derive not from my observing these attributes in that person. Rather, it is in terms of the categories happiness and unhappiness (and perhaps others) that I myself experience the world around me. I “project” the categories happiness and unhappiness into the person I observe because it is according to these categories that my conscious experience is organized.

Hayek’s meaning in these passages is clear. He’s explaining a sense in which the attributes of social objects derive from our act of observation. He chooses to illustrate this epistemological principle using a few simple examples, and thus it is easy to overlook the full implications of what he is explaining. The “object” of a person’s action is any object that a person is engaged with from his own first-person point of view. The object of my action can be a coin or a price. The object of my action can be a family or a marketplace. In sort, the object of my action is any object I may observe, perceive, or engage with in any way. The principle Hayek enunciates is not limited to the small number of examples he cites. The principle applies to any conceivable social object, including “spontaneous” or “emergent” social objects. If we group the objects and actions we observe into classes or categories which we know solely from the knowledge of our own mind, this principle applies to all objects and all actions regardless of their assumed historical genesis (regardless whether the observed entities were intentionally created or emerged spontaneously).

If I group social objects according to classes or categories in terms of which I think myself, this means that in studying my own mental categories I study essential aspects of the objects of my conscious awareness, including both social objects and physical objects. Since “spontaneous” and “emergent” social objects—to the extent I perceive or observe them—are objects of my conscious awareness, when I study my own mental categories, I thereby study essential aspects of these particular social objects. Therefore, what Hayek describes is a “praxeological” method of studying various social entities including emergent and spontaneous social entities.

Conclusion

Philosophical objectivism is based on the assumption that we can satisfactorily describe the workings of the world without any reference to ourselves.[7] A fundamental assumption of this worldview is that the sensory and intellectual equipment we use to observe the world around us does not shape or limit our observations in any significant way. We are therefore free to embark on a predominantly outward-looking investigation of the physical and social worlds “as they exist in reality.”

The assumptions of objectivism came under heavy scrutiny in the first half of the twentieth century.[8] In social science, the critique of objectivism led to the insight that we can study social phenomena by studying our own “mental categories.” However, theoretical subjectivism was only taken seriously by a relatively small number of social and physical scientists. The larger scientific community remained resolutely objectivist. By the second half of the twentieth century, theoretical subjectivism and the epistemological approach were largely forgotten. Without theoretical subjectivism and epistemology, the conception of praxeology changed, and the discipline that was once conceived as a general science of human action dwindled into a debate about the method of economics.

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[1] On Solipsism, Eddington writes: “The externality of the physical world results from the fact that it is made up of structures found in different consciousnesses. Thus, the recognition of sensations other than our own, though not required until a rather later stage of the discussion, is essential to the derivation of an external physical universe. Our direct awareness of certain aural and visual sensations (words heard and read) is postulated to be an indirect knowledge of quite different sensations (described by the words heard and read) occurring elsewhere than in our own consciousness. Solipsism would deny this; and it is by accepting this postulate that physics declares itself anti-solipsistic.” (PPS-198/199)

As a clarification, it is important to note that subjective methodological individualism does not require the denial or the affirmation of unobserved entities. In the procedure we have in mind, we class as unobserved entities those things we refer to (in our thought, speech, and writing) but do not observe—entities such as other minds, concepts, the future, the back side of things, etc. As these entities are unobserved, they have, as such, no observable characteristics with which to differentiate one from the other. Thus, we place each of these entities in a singular “unobservable” category. From our theoretical point of view, there is no basis for distinguishing between various assumed or postulated entities, each of which has no observable characteristics or attributes. These several entities become in our theory one unitary thing, i.e., the unobservable aspect of consciousness. We do not deny or affirm the existence of such entities, we simply classify them according to our classification scheme.

[2] See Talcott Parsons: “As a preliminary it is important to note that Pareto immediately lays down the possibility of studying social phenomena from two different points of view which he calls the objective and the subjective, respectively. The objective is first characterized as what the phenomenon “is in reality” and opposed to the way it appears “in the mind of certain persons.” The further development of the distinction, however, especially linking the objective aspect with the way in which action appears “for those who have extended knowledge” makes it legitimate to infer that the objective point of view is that of the scientific observer, while the subjective is that of the actor.”(SSA-187-189)

[3] This problem of social science was noticed, but never solved. For example, Talcott Parsons, in describing the structure of social science, writes:

“It may be said that all empirical science is concerned with the understanding of the phenomena of the external world. Then the facts of action are, to the scientist who studies them, facts of the external world—in this sense, objective facts. That is, the symbolic reference of the propositions the scientist calls facts is to phenomena “external” to the scientist, not to the content of his own mind. But in this particular case, unlike that of the physical sciences, the phenomena being studied have a scientifically relevant subjective aspect. That is, while the social scientist is not concerned with studying the content of his own mind, he is very much concerned with that of the minds of the persons whose action he studies.” (SSA-46)

Parsons provides here a typical conception of the structure of social science. In this conception, the social scientist studies facts “external” to the social scientist himself. What differentiates social science from physical science is that the external objects studied by the social scientist have a scientifically relevant subjective aspect. In a plain reading of Parsons’ passage we would understand him to mean that the “external” objects studied by the social scientist are external in a spatial sense. That is, the social scientist does not study phenomena that are located within the confines of his own skull, but instead studies objects that are to be found in the spatial region external to his own skull. The objects studied by the social scientist, and which have a relevant subjective aspect, are distributed in the space external to the scientist himself, not within the space that the social scientist occupies.

Though this meaning would be the plain meaning of Parsons’ passage, it is not his intended meaning, as he provides the following clarification about his use of the term “external” in a footnote:

“Epistemologically, not spatially “external.” The external world is not “outside” the knowing subject in a spatial sense. The subject-object relation is not a relation in space. (SSA-46)

Thus, Parsons explains that his use of the term “external” does not refer to a spatial relationship. However, the qualifier “epistemologically” in the phrase “epistemologically external” does not eliminate the spatial relationship expressed by the phrase. The qualifier simply introduces ambiguity. For example, if I write a paragraph that repeats the term “chocolate,” and then later explain that by chocolate I do not mean milk chocolate but “epistemological chocolate,” I have not thereby indicated a new, non-food meaning of the term “chocolate.” I have simply created an ambiguous term. The terms “epistemological chocolate” and “epistemologically external” have no known meaning. And thus, while Parsons has correctly realized that there is a theoretical problem in employing physical distinctions in social science (internal/external, higher/lower, more/less, etc.), he has not solved the problem. He has stated that the distinction in question is not a spatial distinction, but he has not provided a valid alternative distinction.

Mises too realizes the problem with employing physical distinctions in social science, and he belatedly begins to address the issue:

“We may define the external world as the totality of all those things and events that determine the feasibility or unfeasibility, the success or failure, of human action.” (U-6)

Thus, Mises’s solution would have been to translate physical concept pairs such as internal/external, near/far, higher/lower, etc., into social-scientific concept pairs such as success/failure. The passage above, however, was written when Mises was over eighty years old. His major works had already been written by this time, and these works employed many of the physical distinctions at issue.

[4] It is noteworthy that in this passage Mises speaks not merely of a process of deduction, but more specifically, of a process of deduction in which one terminus is the “category of action.” If we think of deduction in the Hayekian sense as tautologies, “those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start”(IEO-34), what Mises is saying is that the deduced propositions of praxeology are essentially tautological transformations proceeding from the “category of action.” A simple tautological transformation in our understanding of the term is the mathematical equation 136 = 17 x 8. If I assume that I have one hundred and thirty six of something, it is not immediately apparent to me that I have therefore, seventeen sets of eight of that same thing. I can find out that my having 136 of something means I also have 17 sets of 8 of that thing by a process of “deduction,” a process by which I “tautologically transform” the assumed 136 into the implied 17 x 8. Mises sees praxeology as performing essentially the same function with respect to the assumed “category of action.” Praxeology seeks to deduce (to tautologically transform) the implications of action; the assumption that an actor attempts to replace the situation facing him with a different situation.

[5] In Mises’s philosophy, the epistemological approach to knowledge means primarily the study of the mind and of mental categories. “The a priori categories are the mental equipment by dint of which man is able to think and to experience and thus to acquire knowledge. Their truth or validity cannot be proved or refuted as can those of a posteriori propositions, because they are precisely the instrument that enables us to distinguish what is true or valid from what is not. What we know is what the nature or structure of our senses and of our mind makes comprehensible to us. We see reality, not as it “is” and may appear to a perfect being, but only as the quality of our mind and of our senses enables us to see it.” (U-18) “For, as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind.” (U-65)

[6] By this I mean there is no isolated section or passage in which a rigorous deduction is performed, beginning from the category of action, and ending in a widely recognized economic law or phenomenon.

[7] “It may be said that classical physics is just that idealization in which we can speak about parts of the world without any reference to ourselves. Its success has led to the general idea of an objective description of the world. Objectivity has become the first criterion for the value of any scientific result.” (PP-55)

The conception of praxeology within the Austrian School begins with Carl Menger. In his book Investigations into the Method of the Social Sciences, Menger sketches the outlines of a discipline concerned with exact laws as distinct from empirical laws.

The types and typical relationships (the laws) of the world of phenomena are not equally strict in all cases. A glance at the theoretical sciences teaches us rather that the regularities in the coexistence and in the succession of phenomena are in part without exception; indeed they are such that the possibility of an exception seems quite out of the question. However, some are such that they do indeed exhibit exceptions, or that in their case exceptions seem possible. The first are called laws of nature, the latter empirical laws. (I-50)

The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which commonly are called “laws of nature,” but more correctly should be designated by the expression “exact laws.” (I-59)

What is the purpose of the “exact” theoretical sciences?

The purpose of the theoretical sciences is understanding of the real world, knowledge of it extending beyond immediate experience, and control of it. We understand phenomena by means of theories as we become aware of them in each concrete case merely as exemplifications of a general regularity. We attain a knowledge of phenomena extending beyond immediate experience by drawing conclusions, in the concrete case, from certain observed facts about other facts not immediately perceived. We do this on the basis of the laws of coexistence and of the succession of phenomena. We control the real world in that, on the basis of our theoretical knowledge, we set the conditions of a phenomenon which are within our control, and are able in such a way to produce the phenomenon itself. (I-55,56)

It is important to note that Menger’s conception of scientific laws includes not only laws of the succession of phenomena, but also laws of the copresence of phenomena. Menger is not only conscious of regularities in which there is a temporal separation between phenomenon A and phenomenon B, but also of regularities in which A and B appear “copresently.”

Praxeology is thus a relatively simple notion. It is a discipline that studies exact laws; those regularities in which phenomenon A follows phenomenon B without exception, or in which phenomenon A is copresent with phenomenon B without exception. When Menger refers to “exact research,” he means the study of exact laws in all the realms of the universe in which we live (the physical realm, the social realm, etc.). When Ludwig von Mises refers to “praxeology,” he means the study of exact laws exclusively in the realm of social phenomena.

The Problem of the Relationship between Two Nonidentical Phenomena

Though the conception of praxeology is relatively simple, the practice of praxeology is correspondingly difficult. It is easy to define the general goal of praxeology (the study of exact laws of social phenomena), but it is difficult to conceive or formulate valid exact laws in a given social realm, such as the realm of market phenomena (economics). We begin with the assumption of two nonidentical phenomena A and B. Let us take this short passage from Mises to illustrate:

The first and basic achievement of thinking is the awareness of constant relations among the external phenomena that affect our senses. A bundle of events that are regularly related in a definite way to other events is called a specific thing and as such distinguished from other specific things. The starting point of experimental knowledge is the cognition that an A is uniformly followed by a B. The utilization of this knowledge either for the production of B or for the avoidance of the emergence of B is called action. The primary objective of action is either to bring about B or to prevent its happening. (U-20)

Thus, we are talking about two nonidentical phenomena, A and B, and how to bring about B (or prevent its happening) by means of phenomenon A. Praxeology is only concerned with exact laws (in which B must necessarily happen if A happens) and not with empirical laws (in which Bmay or may not happen if A happens). The goal will be to demonstrate an exact relationship between nonidentical phenomena A and B such that the production or emergence of A must necessarily produce phenomenon B without exception. As Mises writes:

Praxeological knowledge makes it possible to predict with apodictic certainty the outcome (B) of various modes of action (A). (HA-117)(A and B have been added for the purpose of clarity.)

To understand the difficulty involved in formulating or conceiving a praxeological law, let us take an example of a deduced law of economics as provided by Mises in Epistemological Problems of Economics. We will highlight the important parts of the passage and add A‘s and B‘s for clarity.

For example, we deduce from our theory that when the price of a commodity rises (A), its production will be increased (B). However, if the expansion of production necessitates new investment of capital, which requires considerable time, a certain period of time will elapse before the price rise (A) brings about an increase in supply (B). And if the new investment required to expand production (B) would commit capital in such a way that conversion of invested capital goods in another branch of production is altogether impossible or, if possible, is so only at the cost of heavy losses, and if one is of the opinion that the price of the commodity will soon drop again, then the expansion of production (B) does not take place at all. In the whole process there is nothing that the theory could not immediately explain to us. (EP-163)

The first thing to note is that Mises is here discussing a deduced relationship, which means a relationship established by logical reasoning. The deduced relationship between A and B in this passage is, for Mises, of the same logical character as the other deduced relationships of economics and praxeology. Mises does not envision or conceive various classes of deductions, with each type of deduction differing with respect to its degree of certainty. In Mises’s system there are only deduced (a priori) relationships on the one hand, and relationships shown to us by experience (empirical or historical relationships) on the other hand. The relationship between the increase in the price of a commodity and the increase in the commodity’s production is, according to Mises, a deduced, praxeological relationship.

As we can see, Mises explains that granted assumption A (an increase in the price of a commodity), we deduce phenomenon B (an increase in the production of the commodity). However, he also explains that granted assumption A, phenomenon B may not take place at all. Mises’s explanation amounts to an admission that though we may deduce B from A in a theoretical context, we do not thereby learn whether phenomenon B must happen if phenomenon A happens. We cannot say that based on our theoretical deduction, phenomenon Bmust follow phenomenon A with apodictic certainty. This is clear and apparent in Mises’s explanation.

Mises accounts for this discrepancy—the deduced relationship between A and B versus the “actual” relationship between A and B—by stating that if Bdoes not take place, our theory will be able to explain why it did not take place. But this explanation skirts the issue. The primary purpose of praxeological knowledge is not to provide a satisfactory historical account, ex post, of why phenomenon B did or did not take place. The primary aim of praxeology is knowledge instructing us on how to bring about B or to prevent B‘s happening in the future, and with certainty, by means of phenomenon A. As Mises writes:

Praxeological knowledge makes it possible to predict with apodictic certainty the outcome (B) of various modes of action (A). (HA-117)(A and B have been added for clarity.)

In Mises’s explanation, we can see that the relationship between an increase in the price of a commodity and an increase in the production of the same commodity is an empirical relationship, because when the price increases, an increase in the production of the commodity may or may not happen. Since we know that B may or may not happen, but do not know a priori which possibility will be actualized, we can only know which possibility is actualized a posteriori (by experience).

Thus, either: (1) this particular deduction of economics is not a valid praxeological deduction, or (2) the relationships of praxeological theory are empirical not a priori. We conclude therefore that this particular deduction of economics is not a valid praxeological deduction.

The Problem of the Relationship between Two Nonidentical Phenomena

It is important to realize that praxeology is not identical to the unqualified application of “logic” to various assumed situations. To conceive praxeology as merely discursive reasoning applied to assumed social or market situations is a misnomer. The object of praxeological theorizing is not situations but action. “Situations,” conceived as objective phenomena occurring in nature, are not the subject matter of praxeology. Strictly speaking, in praxeology there is no such thing as “an increase in the price of a commodity,” whereby we conceive of a social phenomenon independent of a social actor. Phenomena conceived as occurring in nature independent of volition are objects of natural science. In praxeology, an actor may increase the price of a commodity or an actor may observe an increase in the price of a commodity. These are both actions and, as such, objects of praxeological study. The focus of praxeology is not events, but actions.

Having clarified the object of study, we may now ask: If I, an actor, increase the price of a commodity (an action), must I, or another actor, necessarily then increase the production of this commodity (an action)? Or, if I, an actor, observe an increase in the price of a commodity (an action), must I or someone else necessarily increase the production of this commodity (an action)? The answer, as Mises explains, is no. The relationship between an increase in the price of a commodity and an increase in the production of a commodity is therefore an empirical relationship.

Let us consider the following conception: If I increase the price of a commodity (an action), must I necessarily decrease the amount of that commodity that may be purchased? In other words, does my increasing the price of X (action A) have the necessary effect of decreasing the amount of X that can be purchased (consequence B)? If so, then my action of increasing the price of X can be said to have a “necessary consequence.” The difference between this example and the example Mises provides is that here, there is no conceived temporal separation between action A(increasing the price of a commodity) and consequence B (decreasing the amount of a commodity that may be purchased). A and B are here conceived as “copresent” with no temporal separation. In this conception, Aand B are identical in one sense—A and B are part of the same action—and nonidentical in another sense—an actor may consciously intend to do A without consciously intending to do B. We refer to this type of relationship as an “identity relationship,” and we maintain that these types of identity relationships (or “tautological transformations”) constitute the essence of praxeological, exact laws. (See Knott, Introduction to the Theory of Interpersonal Action, 2014, section 1B.)

The Nature of Exact Law

A talk prepared for the International Conference of Prices & Markets, Toronto, November 7, 2015

I. The Conditions of Exact Law

Our initial conception of an exact law is a relationship between A and B such that if I do A, then B must necessarily occur. If I do A, the occurrence of B is inevitable or unavoidable.

When I refer to an exact law, I’m referring to the relationship between the action of a conscious subject, and that which must necessarily accompany that action as experienced by the actor him or herself. This is important. I’m referring to a subjective phenomenon. I’m not referring to the relationship between the action of another person that I observe, and the consequences of that person’s action as I observe it.

So this is subjectivism and methodological individualism combined. We are referring only to the action of a conscious subject, and that which must necessarily accompany the action, from the point of view of the actor who performs the action. We are not talking about observed action, but rather about performed action.

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For an exact law to have practical utility, phenomenon A and phenomenon B must be nonidentical in some sense. The formula “If I do A, then I do A“is of little practical value. By contrast, the formula “If I do A, then I do B” has meaningful practical value.

An exact law relating A to B means that I know B will occur even though while I’m doing A I may not be able to observe B. Thus, Carl Menger, in discussing scientific laws, refers to “knowledge extending beyond immediate experience”(I-67) and to “facts not immediately perceived.”(I-56)

*

In the search for exact laws, we will rule out those regularities in which there is temporal separation between A and B.

First, if there is temporal separation between A and B, in the intervening time period, the components of what were to constitute B may be destroyed or altered so that B does not occur. Then, it is possible to do A without the occurrence of B.

Second, if there is temporal separation between A and B, and the time period between A and B cannot be specified, a person may do A, whereas result or consequence B may not happen in his or her lifetime or may not happen for centuries. The practical utility of an exact law in which phenomenon B may not happen for centuries is obviously minimal. On the other hand, no one has figured out a way to formulate an exact law in which there is a precise time limitation between the doing of A and the occurrence of B.

In his book Epistemological Problems of Economics, Mises makes an indirect insight into the problem of temporal separation. He writes that we deduce from a price increase in a commodity (phenomenon A), that production of the commodity will increase (phenomenon B). He then explains that in the intervening time period between A and B, circumstances may arise such that B(the increase in the production of the commodity) does not take place at all. (Development of the Subjective Theory of Value, p. 163). The apodictic certainty required of a praxeological law is obviously lacking if a person can do A while the occurrence of B is uncertain. This indicates that in the search for exact laws or a priori knowledge we must focus on those relationships in which A and B are “cotemporaneous” or “copresent.”

*

The example we will use to illustrate the nature of exact law is the action of walking toward a location (action A). In walking toward a location, I necessarily walk away from a different location (necessary result or consequence B).

In considering this example, we can see that A and B—walking toward a location and walking away from a different location—are part of the same action. But there is an important sense in which A and B are not the same: An actor may, in this case, observe his or her own doing of A, while not observing his or her doing of B. A and B are thus nonidentical in the subjective sense because an actor may be consciously aware of doing A while not consciously aware of doing B.

We thus arrive at the following conditions of an exact law:

1. If I do A, B must necessarily happen or occur.

2. A and B are “copresent” with no temporal separation between them.

3. A and B must be nonidentical in the sense that I can be consciously aware of A while not consciously aware of B. A and B are nonidentical in this subjective sense.

II. The Structure of Exact Law

In an exact law, A and Bare copresent, but A and B cannot both be observable. An exact law is not a relationship between two observable phenomena. Austrian Economist J.G. Hülsmann argues the same thing in his essay “Counterfactual Laws of Human Action.”

Exact laws derive from, or are a function of, confining one’s analysis to a single observation or action. Conversely, empirical laws are derived from the analysis of multiple, time separated, observations or actions.

[“Observation,” as intended here, is not identical to “visual inspection.” Observation here means the presentation of a perception or sensation (or a bundle of these) to a consciousness. An observation can be a visual presentation, but it can also be a tactile presentation, an audio presentation, a mental image, etc. By the term “observation,” I mean a perception or sensation of any kind, present to a consciousness.]

Referring again to our example, in performing my action of walking, I observe my walking toward a location (phenomenon A), but I do not observe my walking away from a different location (phenomenon B). Remember that we will confine ourselves to the analysis of the unitary action from the point of view of the actor who performs the action.

I thus have on the one hand, an observable aspect to my action. We may refer to this as a “category” of observability, or a category of perception—a category of things that present observably to my consciousness. On the other hand, there is a nonobservable aspect to my action—what we may refer to as a category of nonobservability.

To understand this category of nonobservability, consider the things we assume or believe are “there now” or “happening now” at any given moment, but which we do not actually observe. For example, I believe or assume that the back of that wall (points to wall) is “there now,” but I do not now observe the back of that wall. The back of that wall is, to me, a “presence” that I do not perceive or observe. It is present (I assume or believe), but not presently perceived or observed by me. We might refer to the back of the wall as a nonperceptual presence.

When I walk toward a location (action A), I assume or believe I am walking away from a different location (occurrence B), but I only observe A, while B remains a “thing” or “occurrence” that I do not observe.

These two categories are “copresent.” When I see a wall, the back of that wall is “there” as a copresent and unobservable aspect of my action of seeing the front of the wall.

Thus, a simple structure begins to emerge. We may conceive that our consciousness is structured in terms of two primary categories. One category is comprised of presently observable, perceivable, or sensable content; the other category is constituted of “things” that I believe to be present, but which I do not presently observe, perceive, or sense.

[Theoretically, there is no basis for distinguishing between assumed entities that have no observable or differentiable characteristics. Thus, in the present theory, there is no difference between the back of that wall and my walking away from a location. Differentiation implies differentiable characteristics, which in turn implies observable characteristics. The unobservables we are discussing here have no differentiable or observable characteristics. Thus, strictly speaking, the unobservable “things” I refer to should not be referred to in plural, but should instead be referred to as a singular category of unobservability.]

III. The Binary Nature of Social Interaction

The focus of libertarian social thought is social interaction: person-to-person social interaction, social interaction through a political process, or social interaction through a market process. When I interact with another person, the mind or consciousness of that other person is always an unobservable or “nonperceptual presence.” When I interact with another person, whether face-to-face, or by telephone, or by other means, that person’s mind or consciousness is, for me, “there now,” but I never observe the mind of the person I interact with, just as I never observe the back of the wall or observe my walking away from a location.

When I interact socially, I locate, in my own conscious field, another mind or consciousness similar to my own. I then direct my actions or communications toward the mind or consciousness I have located. The mind or consciousness I locate is always unobserved. I see a physical body, I hear a voice, I feel a touch or smell a scent, but I never observe another mind or consciousness though I believe one to be present during my act of social interaction.

We can thus see that my act of social interaction conforms to the structure of action we have been discussing. On the one hand, there is the observable aspect of social interaction; the body or voice I observe (as discussed, a category of perceptual presences). On the other hand, there is the unobservable aspect of social interaction; the mind or consciousness of the other person which I do not observe (as discussed, a category of nonperceptual presences). My act of social interaction is of the same essential structure as my other actions.

We are conceiving the structure of action in terms of two fundamental categories. Now, for a moment, consider the following concept pairs taken from ethics and economics: good/bad, moral/immoral, just/unjust, happiness/unhappiness, satisfaction/dissatisfaction, pleasure/pain, supply/demand, means/ends, etc.

Of course, we are all familiar with the following everyday concept pairs of science and thought: more/less, increase/decrease, higher/lower, internal/external, sooner/later, near/far, before/after, dark/light, light/heavy, and many others. The binary nature of things seems to be all around us. In fact, the binary form seems essential to our comprehension of the world around us.

What if we assume that the myriad binary phenomena derive, not from the structure of the physical universe, but from the structure of our consciousness? What if the things I observe are comprised of two parts because my consciousness is comprised of two parts? The idea of studying the world around us by studying our own mental categories is not new. In fact this is what Ludwig von Mises suggested we do. He wrote: “For as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind.”(U-65) Mises’s insight was that we may study the social world by studying or own mental structure. As he wrote in Human Action: “We must bethink ourselves and reflect upon the structure of Human Action.”(HA-64)

Hayek expounded on this approach to social science in his essay “The Facts of the Social Sciences”. He wrote:

We invariably interpret [other people’s actions] on the analogy of our own mind: that is, we group their actions, and the objects of their actions, into classes or categories which we know solely from the knowledge of our own mind… We always supplement what we actually see of another person’s action by projecting into that person a system of classification of objects which we know, not from observing other people, but because it is in terms of these classes that we think ourselves… (IEO-63)

IV. Exact Law and Social Interaction

When I interact socially, I locate another mind or consciousness within my own conscious field, and I direct my actions or communications toward that other mind. Though it seems a little unorthodox to use the phrase “locate another mind,” this is just a philosophical way of expressing something we do every day. Before we communicate with another mind, first we must locate another mind, otherwise we would have no idea where to direct our communications or actions. When I say “locate another mind” I mean this in the subjective sense. The actor has “located” another mind when another mind is present in his or her conscious field.

Let us call my locating another mind actionA.

According to what we have been discussing, I assume that my consciousness is constituted of two categories: a category of perceptual presence (things that are observable), and a category of nonperceptual presence (the unobservable aspect of my consciousness).

On the one hand, in order to interact socially, I must locate another mind. On the other hand, I’ve made the assumption that I never observe another mind. The mind I locate during social interaction, I now suggest, is simply the unobservable aspect of my consciousness. In other words, when I do A (locate another consciousness), what I have located is the unobservable aspect of my consciousness, B. A and B are, in one sense, identical.

However, this unobservable aspect of my consciousness is not identical to the mind of another person in the subjective sense. When I locate another mind (action A), I generally do not believe, or I am generally unaware, that I am faced with an aspect of my own consciousness. A and B are thus nonidentical in the subjective sense because in my daily life and activities, I am generally unaware that when I do A I am doing B. Because I may be unaware of the identity between the unobserved entities I believe to be present, and the unobservable aspect of my consciousness, a law relating the two has practical utility.

We may have thus satisfied the conditions of an exact law. The unobservable I locate (A) is identical to the unobservable aspect of my consciousness (B), and thus, when I do A, I must do B. There is no temporal separation between A and B. A and B are nonidentical in the subjective sense that I may do A while being unaware that I am doing B. The subjective nonidentity between A and B imparts the law with practical utility.

V. The Practical Utility of Exact Law

An important distinction in libertarian social theory is the distinction between the market economy and the command economy. As one website informs us:

Market economies and command economies occupy two polar extremes in the organization of economic activity. …The activity in a market economy is… determined by the supply and demand of goods and services. Alternatively, a command economy is organized by government officials…

(Investopedia.com. Article: “What’s the difference between a market economy and a command economy?” 10/25/15)

As libertarians, we are familiar with these two polar extremes: on the one hand, the vision of a society organized by the market and by the price system, and on the other hand, the vision of a society organized by the commands and orders of men. As libertarians, of course, we advocate a society in which the market and the price system have an expanded role, and in which the orders and commands of men have a diminished role.

When our fellow citizens have asked us to explain why we prefer the market society to the command society, we have generally provided two types of answers. We have argued that a libertarian society is an ethical society (the explanation of libertarianism in terms of ethics), and we have argued that a libertarian society is a prosperous society (the explanation of libertarianism in terms of economics). I would like to suggest a third explanation of libertarianism; an explanation of libertarianism that is independent of ethics and economics.

In what we have covered today, I have tried to show how the objects of consciousness are each structured the same: each object has an observable and an unobservable component. In my daily life and activities, I can, to some degree, isolate these components in the social objects I interact with. For example, when I use a gold coin as a means of social interaction, I may focus on the observable qualities of that gold coin (its color, its weight, etc.), and I may pay little attention to the unobservable aspects of that coin. By contrast, when I interact with another person face-to-face, I may pay quite a bit of attention to the unobservable aspects of that person. For example, I may become concerned with that person’s thoughts, intentions, values, and motives. The thoughts, intentions, values, and motives, of another person are unobservables, similar to the back of a wall.

Thus, I may pay greater attention to the unobservable aspect of some forms of social interaction as compared to other forms of social interaction. This is important because if I find some means of social interaction more troubling than others, either consciously or unconsciously, I may tend to favor, or seek to utilize, those means of social interaction that I find less troubling. Since the thoughts, intentions, values, and motives of another person are unobservable to me, I may find those means of social interaction in which I have to deal with such unobservables somewhat troubling or dissatisfactory. On the other hand, I may find those means of social interaction in which I deal mainly with observables (such as money pieces, tangible commodities, posted prices, etc.) less troubling and more satisfactory by comparison.

For these reasons, I may tend toward certain forms of social interaction and tend to avoid other forms of social interaction, even before I am theoretically able to identify the reasons I do so. I may come to identify, loosely, a group of “market-related” means of social interaction consisting of observable monetary units, observable prices, etc., and I may come to prefer them over those forms of social interaction in which I deal with the unobservable mind of another person directly. I am suggesting that the libertarian preference for the market society has a basis in our categories of consciousness. On a fundamental level, independent of ethical or economic considerations, we prefer the market society because we find it a more satisfactory and less troubling means of social interaction.

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Praxeology and Coercion

Menger and Exact Laws

Praxeology is the study of necessity in human action. If I walk toward a location, I necessarily walk away from a different location. Walking away from a location is the necessary result or consequence (B) of my conscious action (A) of walking toward a location. Carl Menger, the founder of modern-day Austrian Economics, referred to those relationships in which phenomenon A must necessarily be accompanied by phenomenon Bexact laws. Here is how Menger describes “exact” theoretical research, the discipline Ludwig von Mises refers to as praxeology when applied to the social sphere:

The types and typical relationships (the laws) of the world of phenomena are not equally strict in all cases. A glance at the theoretical sciences teaches us rather that the regularities in the coexistence and in the succession of phenomena are in part without exception; indeed they are such that the possibility of exception seems quite out of the question. However, some are such that they do indeed exhibit exceptions, or that in their case exceptions seem possible. The first are called laws of nature, the latter empirical laws. (I-50)

The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which commonly are called “laws of nature,” but more correctly should be designated by the expression “exact laws.” (I-59)

Thus, in the context of Austrian Economics and Austrian social theory, praxeology begins with Menger’s conception of exact theoretical research.

Mises and Praxeology

Ludwig von Mises designates exact theoretical research in the social realm praxeology, and he classifies economics, or “catallactics” as a sub-category of praxeology. (HA-232-234)

The field of catallactics or of economics in the narrower sense is the analysis of the market phenomena. This is tantamount to the statement: Catallactics is the analysis of those actions which are conducted on the basis of monetary calculation. (HA-234)

Though Mises lays out his conception of praxeology as a general science of human action in all its forms, it is only the economic (i.e., catallactic) sphere of human activity that is the focus of his own praxeological work. He has no knowledge of how the discipline of praxeology may be expanded to treat noneconomic (noncatallactic) forms of human action. (U-98)

The reason it has proven so difficult to conceive of a noneconomic branch of praxeology is to be found in the assumptions made by economics, and the close historical association between economics (the study of market phenomena) and praxeology (the general study of human action). In studying the market economy, economics makes the special assumption of action taken in the context of identical monetary or commodity units. The assumption of identical monetary or commodity units introduces the possibility of mathematical treatment. Thus, when Mises discusses three important laws of economics (The Law of Marginal Utility, The Law of Returns, and The Ricardian Law of Association) we see that he introduces simple mathematical equations (n-1, p/c, 32p + 45q, 3/2 q, etc.). (HA-119-130, 157-160) Economics is thus reliant on the assumption of identical units of supply and on mathematical equations for the formulation of its laws. The problem is that there are forms of human action that cannot make the assumption of identical units of supply, and therefore, standard mathematics cannot be used in the attempt to formulate exact laws of these forms of human action. How one could formulate a nonmathematical, social, exact law, has remained an unsolved problem.

Theoretical/Epistemological Problems in Mises’s Theory

Mises’s conception of praxeology is that of a general science of human action that arrives at exact laws of human action.

Praxeology is a theoretical and systematic, not a historical science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. (HA-32)

Praxeological knowledge makes it possible to predict with apodictic certainty the outcome of various modes of action. (HA-117)

There are at least two unresolved theoretical or epistemological problems in Mises’s system. First, if economics studies action under a given set of circumstances—circumstances that may or may not be present in other actions—this raises the question whether, strictly speaking, economics may be called praxeology. As Mises writes:

[Praxeology] does not concern itself with the accidental and environmental features of this action and with what distinguishes it from all other actions, but only with what is necessary and universal in its performance. (HA-44)

Praxeology is not concerned with the changing content of acting, but with its pure form and its categorial structure. The study of the accidental and environmental features of human action is the task of history. (HA-47)

In making the assumption of identical units of supply, it would appear that the economist specifies a concrete content of action that distinguishes a particular class of actions from all other actions. The particular content of action (in this case, identical monetary or commodity units) can change. But Mises is clear that praxeology does not deal with the changing content of action or with those things that distinguish one action from another. Thus, it is an unresolved question whether economics is to be considered a “branch” of praxeology, or a discipline that treats a concrete content of human action (e.g., history), or even a discipline of applied mathematics, or something else.

Second, Mises conceives praxeology as arriving at exact laws of human action such that if action A is executed, result or consequence B must necessarily happen or occur. And he conceives that praxeological knowledge is valid not only within the deductive praxeological system, but valid also in the social “real world” in which we act:

The theorems attained by correct praxeological reasoning are not only perfectly certain and incontestable, like the correct mathematical theorems. They refer, moreover, with the full rigidity of their apodictic certainty and incontestability to the reality of action as it appears in life and history. Praxeology conveys exact and precise knowledge of real things. (HA-39)

Mises’s conception of praxeology as indicated in the above passage seems to be contradicted by his statements in other passages. For example:

Apodictic certainty is only within the orbit of the deductive system of aprioristic theory. The most that can be attained with regard to reality is probability. (HA-105)

And:

For example, we deduce from our theory that when the price of a commodity rises, its production will be increased. However, if the expansion of production necessitates new investment of capital, which requires considerable time, a certain period of time will elapse before the price rise brings about an increase in supply. And if the new investment required to expand production would commit capital in such a way that conversion of invested capital goods in another branch of production is altogether impossible or, if possible, is so only at the cost of heavy losses, and if one is of the opinion that the price of the commodity will soon drop again, then the expansion of production does not take place at all. (EP-163)

Thus, it is unclear, given Mises’s conflicting statements, and given the example above, whether he conceives that deduced praxeological laws are apodictically certain only within the theory itself, or conceives that deduced praxeological laws apply with apodictic certainty to social “reality.” In the passage above, Mises is clear in speaking of a deduced, nonempirical, relationship between A and B. He then describes a possible scenario in which we assume that A happens and yet B does not happen. This means that upon the occurrence of A, phenomenon B may or may not happen, which is characteristic of an empirical, not exact, regularity. This theoretical conundrum is the reason why Hayek claimed that praxeology cannot be applied to market phenomena and that the study of market phenomena can only be the study of empirical regularities. (HP, 2013)

Praxeology as a General Science of Human Action

As we’ve seen, in the context of Austrian School social theory, the idea of exact social science (what Mises terms praxeology) begins with Menger. Mises largely accepts Menger’s conception wherein each realm of knowledge may be approached from either the exact or the empirical standpoint. For example, there is the exact discipline of formal logic (the logic of propositions), the exact discipline of mathematics (the logic of the physical world and extended space), and the exact discipline of praxeology (the logic of human action). According to this vision, any subject matter may be approached formally as an “a priori” or “exact” discipline. Starting from this conception, it is relatively easy for Mises to see that most social scientists and social thinkers in his time are not engaged in formal analysis, but are engaged rather in historical, empirical, or normative studies. As he writes: “Up to now the only part of praxeology that has been developed into a scientific system is economics.” (U-43) In other words, outside of economics, no one is attempting to approach the myriad social phenomena formally. In his writings, Mises constantly reiterates his theoretical vision in which praxeology is conceived as a formal, exact, or a priori science that studies human action in all its forms. Economics, by contrast, studies only a circumscribed and delimited subset of human actions.

In recent years it has finally begun to occur to those interested in Austrian School scholarship that the discipline of praxeology could perhaps be applied to social phenomena aside from market phenomena. The question is: why has it taken so long for Austrian scholars to take notice of Mises’s original vision of a formal discipline that extends beyond economics? The explanation has to do with Mises’s two most influential students, Friedrich Hayek and Murray Rothbard.

Hayek

Besides being Mises’s most capable student, Hayek had a deeper understanding of praxeology and subjectivist thought than any of Mises’s other students. Hayek’s two essays “Economics and Knowledge” and “The Facts of the Social Sciences” are important contributions in the field of praxeology and social theory generally. Because Hayek was both capable and knowledgeable, his opinion had influence. Hayek was of the opinion that while praxeology (which he called The Pure Logic of Choice) was an important analytical tool for understanding individual economic agents, it was inappropriate and inapplicable as a tool for studying the interaction between economic agents. Hayek drew the conclusion that therefore, praxeology was not an appropriate theoretical framework for studying market phenomena.

What I see only now clearly is the problem of my relation to Mises, which began with my 1937 article on the economics of knowledge, which was an attempt to persuade Mises himself that when he asserted that the market theory was a priori, he was wrong; that what was a priori was only the logic of individual action, but the moment that you passed from this to the interaction of many people, you entered into the empirical field. (HH-72)

Thus, to the extent that Hayek had influence on the direction of Austrian scholarship, his influence served to direct Austrian scholarship away from Mises’s theoretical vision, and toward other approaches.

Rothbard

Rothbard is best described as a moralist in the sense that his chief interest as a libertarian social thinker was normative ethics. In libertarian ethics as it was practiced by writers such as Rothbard and Rand, the aim is to demonstrate that if action A is performed, the actor who performs it will be bad, evil, immoral, or unjust. (EOL-12,32) By contrast, in the kind of social science practiced by Menger and Mises, the aim is to demonstrate that if action A is performed, then result or consequence B must necessarily happen. There is a vast difference between the formal and the normative approaches to social phenomena. Whereas Rothbard and Rand approach their subject matter in the spirit of a judge, Menger and Mises approach their subject matter in the spirit of a physicist.

What confuses many about Rothbard is his advocacy of praxeology and his support of Mises qua economist. Rothbard advocated praxeology, but not because he understood it deeply or because he agreed with Mises’s scientific vision. Rothbard advocated praxeology because he supported the conclusions Mises reached regarding the market economy. Rothbard admired Mises’s defense of the free-market economy and sought to emulate it. As praxeology was part of Mises’s economics, when Rothbard took up Mises’s economics, he thereby took up praxeology. However, Rothbard never really understood praxeology as Mises understood it. In Mises’s theory, the regularity of phenomena, both social and physical, derives from the structure of the human mind:

For, as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind. (U-65)

To a moralist such as Rothbard, this notion was entirely foreign. For Rothbard, the idea that one could study social regularity by studying mental categories was not only puzzling, but such an approach ignored the most important goal of moralist social theory: the identification of enemy actors. In Rothbard’s mind, what was needed was a theory of libertarian ethics that could distinguish just from unjust conduct from a libertarian perspective. Once unjust actors could be identified with reference to an accepted theory of libertarian justice, they could be targeted with hostile actions in an attempt to stop them from aggressing upon libertarians. This was Rothbard’s overriding concern, and it was this concern that took precedence in his social theory.

Rothbard advocated praxeology mainly as a foundational preamble or foundational rationale for lending support to the conclusions of free-market economics. He did not think of praxeology as a far-reaching discipline; instead, he thought of it as “the method of economics”—a distinct component of free-market economic theory. To Rothbard, praxeology was something written about in the beginning of an economic treatise that justified the conclusions expressed later in the treatise.

That Rothbard had no interest in praxeology except as a foundational preamble to free-market economics is readily apparent. Rothbard’s defining life’s work, The Ethics of Liberty, was written after he had assimilated and reflected on Mises’s teachings. The subject matter of The Ethics of Liberty is the social sphere of politics, i.e., violence and non-violence used as modes of interpersonal relations. (EOL-25) These are precisely the kinds of non-economic social phenomena that Mises conceived would one day become the subject matter of praxeological study. But though Rothbard had studied under Mises for several decades and wrote vigorously in defense of praxeology, he somehow overlooked the possibility of studying politics and interpersonal violence as a branch of praxeology. In fact, in The Ethics of Liberty, Rothbard explicitly distanced himself from both subjective value theory and value-free analysis (EOL-12,26) (which taken together largely constitute praxeology),and he argued forcefully that Mises’s praxeological approach to social phenomena was deficient. (EOL-206-214)

Regardless whether one is a proponent or opponent of Rothbard’s social theories, the scholarly paradigm he promoted and practiced (praxeology for economics, normative disciplines for interpersonal actions) had a wide and lasting influence on Austrian School scholars. This explains why there have been few, if any, attempts to extend praxeology until recently. Rothbard’s influence in this regard was aptly noted in a recent paper:

An enduring puzzle facing readers of Ludwig von Mises is his view, stated for example in

Human Action (1998, 3) that economics is the “hitherto best-elaborated part” of praxeology. Nearly 900 pages of economic theory follow, leaving no doubt as to the dominant initial position of economics as a branch. Rothbard speculates about the possibility of other “sub-divisions” of praxeology in Man, Economy, and State (2004, 72–74). He distinguishes “praxeology and economics” from other fields such as ethics, psychology, and history. This is based on praxeology’s categorical interest in means and

ends as such without reference to any particular means or end.

However, such accounts of “praxeology and economics” leave little space for a sphere of content for praxeology to call its own, independent of economics. Rothbard writes that, “With praxeology as the general, formal theory of human action, economics includes the analysis of the action of an isolated individual (Crusoe economics)…” (74). While the proposed distinction appears to be between “general and formal” and greater specificity, this sentence could generate confusion because “Crusoe economics” is a fictional device to explain the most fundamental concepts of praxeology itself—from ends and means to production to time-preference. Rothbard’s comment comes at the end of the chapter called “Fundamentals of Human Action,” which uses Crusoe to explain the most fundamental praxeological concepts. This could leave the impression that “economics,” as represented by “Crusoe economics,” has on day one moved in to occupy all of the identifiable territory in this new land of praxeology, taking as its own any and all content that might otherwise be assigned to a core of praxeology itself—an independent core that could be shared with other possible “branches” or “sub-divisions” besides economics.

Unsurprisingly, economics has remained the dominant branch of praxeology decades later, and only a few writers have speculated on what other branches might be.(See: KonradGraf, “Action-Based Jurisprudence: Praxeological Legal Theory in Relation to Economic Theory, Ethics, and Legal Practice,” Libertarian Papers, Vol.3, Art. No. 19 (2011).)

In the opening pages of Human Action, Mises the historian relates the bifurcation that existed in social science before modern subjectivist economics:

Until the late nineteenth century political economy remained a science of the “economic” aspects of human action, a theory of wealth and selfishness. It dealt with human action only to the extent that it is actuated by what was—very unsatisfactorily—described as the profit motive, and it asserted that there is in addition other human action whose treatment is the task of other disciplines. (HA-3)(emphasis added)

This is the conception of the social sciences that Rothbard held, a conception that is only now being called into question.

A Recent Attempt

Now that scholars working in the Austrian School tradition are beginning to understand something about Mises’s vision of praxeology as distinct from Rothbard’s, nascent attempts to extend praxeology beyond economics are surfacing. One recent attempt is an essay entitled “An Outline of a Praxeological Theory of Politics” by Matei A. Apavaloaei. In his paper, the author argues that “politics/political science can be thought of as a praxeological sub-discipline, next to economics and praxeological ethics” and he attempts to delimit and define a praxeological field of politics.

Apavaloaei’s thesis that politics can be thought of as a sub-discipline of praxeology is, of course, just a restatement of what Mises wrote in 1962:

It would be preposterous to assert apodictically that science will never succeed in developing a praxeological aprioristic doctrine of political organization that would place a theoretical science by the side of the purely historical discipline of political science. (U-98)

As we have asserted, it was largely due to Rothbard that Austrian scholars were dissuaded or discouraged from pursuing Mises’s suggested theoretical approach. Apavaloaei, fifty-three years later, will now follow up on Mises’s suggestion.

The author’s main theoretical effort is an attempt to define politics as a branch of praxeology. Toward that end he provides the following definitions:

Politics is going to be defined as the discipline that studies the logic implied by a specific form of human interaction: one individual living off the efforts of another by extracting his resources.(91)

Politics as the field that analyzes coercive action aimed at extracting resources.(92)

Politics analyzes the logic of coercion as it emerges from the interaction between an aggressor (bandit or state) and a victim.(110)

Politics is interested in the logic of one individual living off the efforts of another.(110)

Politics, on the other hand, considers only the aggressor as playing an active part in what concerns the use or threat of force. His goal is to extract resources.(110)

The study of politics involves the application of praxeological reasoning to a specific human endeavor: the extraction of resources by coercive means.(111)

The use of coercion as a means of one individual extracting resources from another.(115)

We have defined politics as the discipline that studies the logic implied by a specific form of human interaction: one individual living off the efforts of another by extracting his resources.(120)

From the definitions provided, we can see the intended meaning of the author. Libertarian social theory (as distinct from economics) is largely concerned with the use of coercion as a means of social interaction. In nonlibertarian society, coercion, or the threat of coercion, is employed to “extract resources” from otherwise unwilling citizens. Citizens of nonlibertarian society must pay taxes and fulfil various mandates or face imprisonment or physical harm. This is what the author has in mind with his definition of politics as one individual extracting resources from another by coercive means.

The suggested definition—politics is the extraction of resources by coercive means—may be adequate in the context of a classroom discussion, or a debate, or a correspondence among fellow libertarians. In an informal setting, loose and imprecise definitions, or definitions containing moral or ethical connotations, may be acceptable. However, praxeology is a formal discipline, not an informal discussion about one’s preferred norms of conduct.

What exactly is coercion? The answer will vary widely depending on whom one asks. A libertarian’s definition of coercion will be different from that of a socialist. A feminist’s definition of coercion will be different from that of a religious fundamentalist. An environmentalist’s definition of coercion will be different from that of a mining executive. In a theoretical context, if we have identified a phenomenon that we classify as coercion, is it not possible to define the essential characteristics of coercion in a formal sense? Is coercion something that only nonlibertarians do to libertarians in order to “extract their resources”? Or is coercion something that everyone does at various times and places? Is coercion an activity that is only practiced by certain unethical people? Or is coercion a universal phenomenon of human action? It is unclear whether the author has done any thinking at all about the nature of coercion.

And what precisely is “living off the efforts of another” or “extracting his resources”? If a mother instructs her child to do house chores and threatens punishment if the child refuses, does the mother meet the definition of politics intended by the author? If so, then this moves us in the direction of a more general and formal definition of politics. Then politics is conceived as something that everyone does at various times and places. If not, then the author’s proposed definition will need further distinctions and qualifications. As the author’s definition now stands, it lacks the formality required of a praxeological definition or category. The definition provided by the author is really just a loose restatement of the libertarian grievance vis-à-vis mainstream society: Mainstream society extracts our resources by coercive means. This is unfair!

The Nature of Coercion

If we are working in the Austrian School tradition, the first thing to make explicit is the distinction between the objectivist and the subjectivist account of social phenomena. Austrian School social theory was founded on the concept of subjective value and on methodological individualism. By contrast, in Rothbardian social theory, subjectivism, the concept of subjective value, and methodological individualism, are abandoned in favor of an (implicit) objectivist approach.

It is a well-established principle of subjective action theory that the activity a person is engaged in is entirely a matter of the intention he is acting with. (See: Hayek, “The Facts of the Social Sciences”; Searle, Minds, Brains and Science, 1984, p. 57-84; Schutz, The Phenomenology of the Social World, 1972, p. 32; Mises, Human Action, 1966, p. 43.)

It is easily seen that all these [social] concepts refer not to some objective properties possessed by the things, or which the observer can find out about them, but to views which some other person holds about the things… If we wish, we could say that all these [social] objects are defined not in terms of their “real” properties but in terms of opinions people hold about them… Whenever we interpret human action as in any sense purposive or meaningful… we have to define both the objects of human activity and the different kinds of actions themselves not in physical terms but in terms of the opinions or intentions of the acting persons… (Hayek, “The Facts of the Social Sciences”)

What the person is really doing, or at least what he is trying to do, is entirely a matter of what the intention is that he is acting with… The explanation of an action must have the same content as was in the person’s head when he performed the action or when he reasoned toward his intention to perform the action.(Searle, Minds, Brains and Science)

For it is obvious that an action has only one subjective meaning: that of the actor himself. It is X who gives subjective meaning to his action, and the only subjective meaning being given by [observers] F and S in this situation are the subjective meanings they are giving to their own actions, namely, their actions of observing X.(Schutz, The Phenomenology of the Social World)

We can see a crown, i.e., a multitude of people. Whether this crowd is a mere gathering or a mass… or an organized body or any other kind of social entity is a question which can only be answered by understanding the meaning which they themselves attach to their presence. And this meaning is always the meaning of individuals. Not our senses, but understanding, a mental process, makes us recognize social entities.(Mises, Human Action)

Thus, at the outset, we will make it explicit that our intention is to arrive at a subjective conception or definition of coercion, not an objective one.

To arrive at a formal definition of coercion, we begin with the phenomenon of action. Generally, action is an attempt to attain a given situation or state of affairs. We will simplify this by saying that action is an attempt to attain X. I, as an acting subject, attempt to attain X.

In addition to the things I attempt to attain (for example, walking right now to the other side of the room), there are things I believe I have attained (such as the house in which I am walking). That is, as distinct from those things I am pursuing, there are other things that I believe are in my possession, or that I can depend on in a certain way, such that I do not have to try to attain them. For example, I am safe right now (as I understand it), and thus I do not have to attempt to attain safety. I own a car right now (as I understand it), and thus I do not have to attempt to attain a car, and so on. We will simplify this by saying that as an acting subject, I have attained Y.

As a conscious acting subject, I am familiar with these “categories of action” and I assume that these categories of action are the same for other beings whom I identify as acting beings (i.e., other humans). Thus, when I approach another being (A) who I believe to be an acting being, I have, or believe that I have, knowledge of the general workings of A‘s mind or consciousness. I have several options in interacting with A. For example, I may try to help A attain the X I believe A is attempting to attain, or I may try to prevent A from attaining the X I believe he is attempting to attain. I may also offer to do an exchange with A, in which I offer to A the Xthat A attempts to attain (as I understand it) while A offers me the X I am attempting to attain.

Yet another option is available to me. If I believe A has attained Y, I may try to make Y “unattained” for A, and then offer Y back to A in an exchange. For example, I may believe that A has attained comfort (i.e., A is not in pain). One of my options in dealing with A is to twist A‘s arm in order to make the Y that was attained for A (comfort), something that A attempts to attain (comfort becomes an XforA), and then offer X back to A in an exchange. For example, I might twist A‘s arm and command: “give me your money and I’ll let go of your arm.” When I do this, I perform the action that we identify as coercion.

Thus, coercion, as we will conceive it, is a specific kind of trade or exchange. Coercion in our conception is not identical to violence, assault, fraud, or aggression. Coercion is a specific means that I may attempt to employ in interaction with another entity I believe to be an acting being. It is a specific interactive technique that I may employ, based on my first-hand knowledge of the workings of the action categories.

We have thus arrived at a formal definition of coercion that is devoid of moral or ethical connotations. Whenever I, an acting being, attempt to make Y, which I believe A has attained, something “unattained” for A, and then offer that thing back to A in an exchange, I practice coercion.

This definition of coercion is not only formal, but it is grounded in fundamental action categories. It is also a subjective definition of coercion that corresponds to the meaning of the action as the actor himself intends it (not a so-called objective definition of coercion rendered from the point of view of an observer, or a definition of coercion according to a particular political ideology). Lastly, our definition of coercion is “value free.” We make no attempt to judge whether the act of coercion is good or bad, just or unjust. We make no attempt to associate the phenomenon of coercion with a concrete political group or party. We only attempt to conceive the essential or universal aspects of the action of coercion. The goal is not to identify individual coercers so that we may correctly apply punishment in the political arena. The goal is to conceive coercion formally so that we may gain insight into the formal implications of this action.

The Procedure of Praxeology

A common notion about the procedure of praxeology holds that beginning from the “action axiom,” one proceeds by deductive or logical reasoning to draw further conclusions and implications. This notion, though partially correct, is not fully correct or accurate. When I, an acting subject, study human action, the primary starting point is not an abstract “action axiom” that I read about in a book or essay. The starting point of my studies is my first-hand experience of the phenomenon of action—the attempt to reach a goal—as I experience this phenomenon in my own conscious awareness.

The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action. It is a knowledge that is our own because we are men…The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of human action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without. (HA-64)

Furthermore, praxeological knowledge is not attained exclusively by applying a formal reasoning process, in chain-like fashion, to an assumed premise or axiom. For example, if I, an acting subject, attempt to coerce someone, this implies that I have located, in my conscious field, a being or entity I believe possesses the same consciousness categories I myself possess. When I locate such a being, I never actually observe any action categories or consciousness categories, though I believe these categories reside with the being I have located. These are two important praxeological insights, but they are not necessarily attained by an application of verbal mathematics to an assumed axiom of action. Rather, insights such as these may be attained by contemplating the nature, form, and patterns, of the conscious activity in question.

Conclusion

The social-scientific discipline that Ludwig von Mises named praxeology derives from Carl Menger’s conception of theoretical exact science. After the passing of Mises in 1973, praxeology, as a discipline that studies human action in all its forms, was not seriously pursued. This is because two of Mises’s most influential students had serious misgivings about Mises’s praxeological vision. Hayek believed that praxeology was not an appropriate framework for studying market phenomena and social interaction. Rothbard was primarily interested in ethics. He conceived praxeology narrowly as a kind of foundational reasoning or preamble that precedes the larger body of free-market economic theory. He referred to praxeology as “the methodology of economics.”(MR, 1976) Thus, when Rothbard turned to examine noneconomic forms of human action such as violence and aggression, he abandoned praxeology altogether, along with theoretical subjectivism, methodological individualism, and the theory of subjective value—the core principles of Austrian School social analysis.

Recently, libertarian writers sympathetic to Austrian Economics have begun to reexamine Mises’s conception of praxeology and have finally realized that praxeology as Mises conceived it is not synonymous with economics. Actions based on identical monetary or commodity units are only a subset of the actions we perform. All of our other “noneconomic” actions, including direct, person-to-person interactions, can be the subject matter of praxeological study. It has taken over fifty years to reach this modest level of understanding.

Unfortunately, just as praxeology is not the same as economics, objectivism is not the same as subjectivism. It was not only Mises’s classification scheme that was overlooked for decades, but just as importantly, the subjectivist approach. Methodological individualism is the theoretical technique of studying phenomena as they appear from the point of view of the individual actor, rather than how they “exist” in “objective reality.” When praxeology was abandoned, so too was theoretical subjectivism. If praxeology is revived, so too will subjectivism be revived.

Sanchez on Praxeology

Daniel Sanchez has posted his views on praxeology on his website. I read through the first two parts of the series and here are my comments and insights.

Praxeology and Economics

For what follows, it will be useful to distinguish between economics (what Mises called catallactics) and praxeology. The focus of economics is market phenomena. As Mises writes:

There have never been any doubts and uncertainties about the scope of economic science. Ever since people have been eager for a systematic study of economics or political economy, all have agreed that it is the task of this branch of knowledge to investigate the market phenomena, that is, the determination of the mutual exchange ratios of the goods and services negotiated on markets, their origin in human action and their effects upon later action. The intricacy of a precise definition of the scope of economics does not stem from uncertainty with regard to the orbit of the phenomena to be investigated. It is due to the fact that the attempts to elucidate the phenomena concerned must go beyond the range of the market and of market transactions. (HA-232)

As is well established, the central concept in the Misesian system is the concept of action. What is action? “Any conscious behavior counts as action—an action is anything that you do on purpose.” (GO-18) An action is a means and an end taken as a unified or singular entity. When the end at which I aim is taken together with the means I utilize toward reaching that end, and considered as a single entity, this entity is an action. This action and its formal structure (its structure without regard to specific content) is the focus of praxeology.

HA-32 “Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case.”

HA-51 “The cognition of praxeology is conceptual cognition. It refers to what is necessary in human action. It is cognition of universals and categories.”

HA-47 “Praxeology is not concerned with the changing content of acting, but with its pure form and its categorical structure.”

HA-44 “[praxeology] does not concern itself with the accidental and environmental features of this action and with what distinguishes it from all other actions, but only with what is necessary and universal in its performance.”

We may define those features of action that may be present in some actions but not in other actions the concrete or empiricalcontent of action. When we study the content of action as distinct from the universal features of action, we are in this respect not involved in praxeological study, but rather in thymological or historical study. The results of a thymological or historical analysis will not apply to all actions because the analysis will draw conclusions from facts that are not present in all actions.

The focus of economics is that subset of human activity involving market exchange, money prices, and monetary calculation:

Not logical or epistemological rigor, but considerations of expediency and traditional convention make us declare that the field of catallactics or of economics in the narrower sense is the analysis of the market phenomena. This is tantamount to the statement: Catallactics is the analysis of those actions which are conducted on the basis of monetary calculation. (HA-234)

Obviously, the realm of market exchange is not identical to the realm of “direct” interpersonal human action. We need only consider these two groups of social phenomena:

Nor are these two realms identical to the realm of isolated actions or mental actions—those actions done in isolation without regard to market exchange or direct interpersonal exchange. Consider the following group of phenomena:

All three groups above list conscious activities (i.e., actions). When we study the realm of market exchange (group 1) we differentiate a related group of content from other possible groups of content. In so doing, we study a particular and contentual aspect of human action, not human action in general (not those aspects that all actions have in common).

In Sanchez’s conception, the line between praxeology (the general science of human action) and economics (the study of market phenomena) is not clearly drawn or explained. His analysis entitled “Praxeology Restated” is written using terms such as production, production good, products, stock, capital, capital good, labor, consumption, etc. These are clearly “economic” terms which have been constructed by economists for the specific purpose of analyzing market phenomena. Are we to now think of these terms as referring to pure praxeological action categories, just as easily applied to the actions of loving or thinking as to the actions of buying and selling? Is the goal to reinterpret economic concepts as praxeological concepts? This is not clear in Sanchez’s treatment.

Scarcity

In the last decade, much has been made about the notion of scarcity. Rothbardians such as Stephan Kinsella have tried to use the notion of scarcity as the centerpiece of their normative argument against intellectual property laws. However, with few exceptions, all the works that attempt to make scarcity central to their argument overlook a very simple question. Should we consider scarcity to be an objective feature of nature? Or should we consider scarcity to be a subjective phenomenon in the same way Austrian theory considers value to be subjective? One rarely sees this issue explicitly raised. In a 2009 article, Bob Schaefer called our attention to the distinction between an objective versus a subjective conception of scarcity:

Kinsella, on the other hand, is intent on objectifying scarcity, i.e., linking the concept (and its supposed omnipotent qualities) to the objective and given qualities of nature. He writes:

Unfortunately, no one paid attention, and the idea of a subjective conception of scarcity fell back into obscurity. Sanchez appears to be utilizing an objective conception of scarcity. He provides a taxonomy of the different kinds of scarcity we may encounter—subtractable, rivalrous, depletable, degradable, super-abundant—but absent is any reference to the idea that scarcity may depend on how the individual actor regards the object in question.

As opposed to the objective conception of scarcity that Austrian writers continue to utilize, there exists a simple subjective conception of scarcity consistent with the Austrian concept of subjective value. If an actor attempts to attain some thing or situation (X), this is identical to his not having a wanted X. The not having of a wanted X is identical to an “insufficient supply” or “short supply” (i.e., scarcity) of X from the point of view of the actor. We may thus consider scarcity a subjective phenomenon that is already implied in the actor’s attempt to attain an object or situation. All action entails scarcity to the extent that action is aiming at an end—the attempt to attain something not presently had. The trying to attain something not had is scarcity for the individual concerned. As far as praxeology is concerned, the concept of scarcity is redundant in the sense that it is simply another way of conceiving the actor’s attempt to reach an end.

Economization and Allocation

Sanchez considers the notions economization and allocation to be important praxeological concepts:

“Scarce means must be allocated to competing ends, leaving some ends unpursued. The ends pursued are chosen as recipients of some of the means. Each of those ends will be apportioned a certain quantity of the means. The ends left unpursued are renounced as recipients of any of the means. Such allocation is called economization. Scarce means are thus also called economic goods.

A definite way of using a means to pursue an end is a use. Thus, economization may also be said to be the allocation of scarce means to competing uses.”

However, there is an important distinction to be made between Robbinsonian economizing and Misesian praxeology. In Robbins’s conception, economizing, in the sense of comparing different ways of utilizing and allocating resources, is the distinguishing and essential characteristic of action. In Mises’s view, economizing is not an essential characteristic of action but rather only one possible mode of action. Kirzner explains:

Economizing consists in the allocation of scarce resources among competing ends. Acting, in the praxeological sense, consists in selecting a pattern of behavior designed to further the actor’s purposes. Of course, the particular allocation that, in any given situation, will be made of scarce means in respect of different ends will constitute a course of action, a pattern of conduct designed to further the achievement of as many of those goals (in their preferred order) as possible. But the concept of action is wider and at the same time more fundamental than that of economizing. Although action may be described in terms of ends and means, such a description is quite different from that of an operation of economizing. In the concept of economy, ends and means constitute a scheme more or less artificially imposed on action so that the relative valuations of ends can be reflected in the specific pattern in which resources are allocated. The essential idea becomes, not the intent pursuit of a set purpose, but the almost mechanical translation of the scale of “ultimate” ends into appropriately apportioned shares at the level of means. “Means” are required for the notion of economy because they are the entities that must be “allocated”; it is in the comparison of different ways of utilizing resources that economizing finds its place.

With the broader notion of action, on the other hand, we are not primarily interested in the particular pattern in which resources will be apportioned among ends. Such an allocation, if carried out, will be of interest as one of the possible implications of action and will, of course, as such, find a place somewhere in the science of human action. But on the basis of Robbins’ conception of the nature of economic science, economics can achieve homogeneity and individuality only by virtue of its concern with the existence of such operations of comparison and allocation of means. The praxeological approach, on the other hand, finds a basis for the homogeneity and individuality of economics at a deeper level, which does not necessarily require a clearly recognizable pattern of allocation. This basis is found in the fundamental characteristic of action, viz., that it is conduct directed at the achievement of a purpose. (EPV-161-2)

In other words, the Robbinsonian notion of economizing (comparison and allocation) is distinct from Mises’s conception of praxeology. From the praxeological point of view, economizing is one possible mode of action, not a universal feature of action, and therefore, economizing is not a praxeological concept.

The Scale of Values

As is often the case, it is important to distinguish between the notion of value as Mises conceived it, and the quasi-objective notion of “scale of values” as Rothbard and others conceive it. Sanchez proposes the objective version rejected by Mises. He writes:

This hierarchy of ends is called a value scale. The further up the scale an end is, the higher it is said to be valued.

By contrast, here is Mises’s conception:

People have often failed to recognize the meaning of the term “scale of value” and have disregarded the obstacles preventing the assumption of synchronism in the various actions of an individual. They have interpreted man’s various acts as the outcome of a scale of value, independent of these acts and preceding them, and of a previously devised plan whose realization they aim at. The scale of value and the plan to which duration and immutability for a certain period of time were attributed, were hypostatized into the cause and motive of the various individual actions. Synchronism which could not be asserted with regard to the various acts was then easily discovered in the scale of value and in the plan. But this overlooks the fact that the scale of value is nothing but a constructed tool of thought. The scale of value manifests itself only in real acting…It is therefore impermissible to contrast it with real acting and to use it as a yardstick for the appraisal of real actions. (HA-102)

In Mises’s conception, a thing (X) can be said to be “valued” only by being sought by an actor. When an actor attempts to attain X we may define this attempt to attain X as “valuing X.” This is what Mises means in writing “The scale of value manifests itself only in real acting.” By contrast, in the conception proposed by Sanchez, X can be said to be “valued” merely by appearing on an imagined or written “value scale” of the actor. In this latter conception, an actor may claim (or write or imagine) that the highest thing on his “scale of values” is to buy a clock, and yet in the next instant buy some socks. In Mises’s conception this would be considered nonsensical. To Mises, things are valued only in being sought in action:

Neither is value in words and doctrines. It is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act. (HA-96)

But this overlooks the fact that the scale of value is nothing but a constructed tool of thought. The scale of value manifests itself only in real acting… (HA-102)

The assignment of orders of rank through valuation is done only in acting and through acting. (HA-120)

Thus, in each action, that thing, X, is “valued” which is sought or done in action. For example:

Action 1: Actor asserts “The most important thing for me is to buy a clock.” (the thing done was making this assertion)

Action 2: Actor buys some socks. (the thing done was buying socks)

Strictly speaking, there is no “scale of values” but rather a sequence of actions and thus a sequence of values (a sequence of things sought or done in action). In Mises’s conception there cannot be several things (X, Y, and Z) all of which are simultaneously “valued” to different degrees. There can only be thing X valued in action 1; thing Y valued in action 2; thing Z valued in action 3; etc. The actor does not “value” X, Y, and Z simultaneously by symbolizing them in an imagined or written scale or plan. This is why Mises writes:

[People]… have disregarded the obstacles preventing the assumption of synchronism in the various actions of an individual… Synchronism which could not be asserted with regard to the various acts was then easily discovered in the scale of value and in the plan.

The conception “scale of values” allows the theoretician to claim synchronism (or simultaneity) in the actor’s “valuing” of multiple objects in action. Mises argues that this is wrong, and we can only designate as “valued” those things actually pursued or actualized in action. If an actor imagines or sketches a scale of his values, or draws up plans for a future action, these are all actions. Given that the actor is doing them or has done them, we may say the actor values or valued doing them. The concrete plan or scale that was written or imagined during these actions has no necessary bearing on a separate action of the actor. As Mises explains in a slightly different context:

It may be very interesting that yesterday goals were set for today’s acting other than those really aimed at today. But yesterday’s plans do not provide us with any more objective and nonarbitrary standard for the appraisal of today’s real acting than any other ideas or norms. (HA-102-3)

The Law of Marginal Utility

Sanchez conceives the law of marginal utility as a praxeological law (as does Mises) that applies to all means utilized in action:

The Law of Marginal Utility applies to all means, whether they are used to directly pursue ultimate ends (as consumption goods) or are used to indirectly pursue ultimate ends (as production goods), or both. The less of a means in a person’s stock, the more valuable is the ultimate end, whether pursued directly or indirectly, that depends on any given amount of it: that is, the higher is its marginal utility. The more of a means in a person’s stock, the less valuable is the end, whether pursued directly or indirectly, that depends on any given amount of it: that is, the lower is its marginal utility.

However, conceiving the law of marginal utility as a praxeological law is a mistake if we are speaking about the law in its traditional or standard form. The law of marginal utility in its traditional or standard formulation applies only to a special circumstance in human action: the case in which an actor possesses a homogeneous supply (supply of identical units) and either increases or decreases his supply of these units. Here is Mises’s explanation of the law of marginal utility:

The judgment of value refers only to the supply with which the concrete act of choice is concerned. A supply is ex definitione always composed of homogeneous parts each of which is capable of rendering the same services as, and being substituted for, any other part… All parts—units—of the available stock are considered as equally useful and valuable if the problem of giving up one of them is raised. (HA-122)

Here is Hoppe’s definition of the law of marginal utility in Economic Science and the Austrian Method:

Whenever the supply of a good increases by one additional unit, provided each unit is regarded as of equal serviceability by a person, the value attached to this unit must decrease. (ES-14)

The law of marginal utility only applies to the special case in human action in which the actor possesses a homogeneous stock or supply and either increases or decreases his stock. The law of marginal utility (in its standard or traditional form) does not apply to those actions in which the actor neither increases nor decreases a homogeneous stock of supply.

There are at least two important problems in the relationship between the law of marginal utility and praxeology.

Problem 1:

Here is how Mises describes the focus of praxeology:

HA-32 “Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case.”

HA-51 “The cognition of praxeology is conceptual cognition. It refers to what is necessary in human action. It is cognition of universals and categories.”

HA-47 “Praxeology is not concerned with the changing content of acting, but with its pure form and its categorical structure.”

HA-44 “[praxeology] does not concern itself with the accidental and environmental features of this action and with what distinguishes it from all other actions, but only with what is necessary and universal in its performance.”

It seems clear that Mises considers praxeology to be the study of only those aspects of action that all actions have in common; those aspects of action that are necessary and universal in the performance of an action. If action does not necessarily and universally require the relinquishing or obtaining of units of a homogeneous supply, then the law of marginal utility only applies to a specific, concrete, situation in action, a situation that is present in some actions but not present in other actions. The fact that a particular action involves a homogeneous stock would seem to be an “environmental, accidental, and individual circumstance of the concrete act” and a “particular feature of the actual case.” The fact that action A involves a homogeneous stock whereas action B does not, implies we are dealing with concrete or empirical content—with a feature that differentiates act A from act B. This is in conflict with Mises’s explicit conception of praxeology as concerned with only the universal aspects of action.

Problem 2:

The so-called “scale of values” (a written or imagined entity) does not determine what the actor “values” at a later time or in a different act. If I draw up a supposed scale of my own values, or concentrate on imagining one, then I have chosen to perform these actions (drawing or imagining a value scale) over all other possible actions. I have chosen to write or imagine a value scale, and thereby demonstrated that I valued doing so. The fact that the drawn or imagined scale lists a number of things in order (car, bike, shirt, gum, etc.) says nothing necessary about what my next action will be. My next action may be combing my hair. This is what Mises means in writing:

Neither is value in words and doctrines. It is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act. (HA-96)

But this overlooks the fact that the scale of value is nothing but a constructed tool of thought. The scale of value manifests itself only in real acting… (HA-102)

The assignment of orders of rank through valuation is done only in acting and through acting. (HA-120)

Thus, we designate as “valuable” or “valued” those things we conceive have been sought or attained in action. X is considered “valuable” because actor A seeks to attain X, or has attained X, or because X occupies a specific categorial position in the action theory in question. If X is considered valuable because it is sought or attained in an action, and if Y has neither been sought nor attained in an action, then Y is not “less” valuable than X (valuable, but “less so” than X), but simply “non valued.” (Y was not sought or attained in an action as was X) For X to be considered “more” or “less” valuable than Y, bothX and Y must be “valued” (i.e., sought or attained in action) and the resulting “valuation magnitudes” compared. It is a theoretical error to refer to a secondary “valuation” Y as having “increased” or “decreased” if Y has not been valued in an action.

Thus, the terms “increase in value” and “decrease in value” imply two acts of valuation, and this is the theoretical shortcoming in the traditional or standard formulation of the law of marginal utility. Because the law of marginal utility implies two acts of valuation, this raises the possibility of a time increment between the two acts, which in turn raises the problem of an intertemporal comparison of two valuations. Consider a case in which an actor with four identical coins uses one coin to purchase gum today and then uses one coin to purchase chocolate tomorrow. Does this prove that the actor values gum more (or less) than chocolate and that he therefore values today’s spent coin more (or less) than tomorrow’s spent coin?

The essence of the law of marginal utility is the idea that an actor, in choosing X instead of Y, values X “more” than Y. Since it is theoretically problematic to claim that a thing sought earlier in time is always considered more valuable than a thing sought later in time, we are forced to seek an explanation that does not involve temporal separation between two acts of valuation. This leads us to a theoretical formulation in which an actor chooses X when he could have chosen Y. This formulation, referring to only one act of choice in explicit terms, avoids the problem of temporal separation, but it introduces a different problem. Since we assume Y wasn’t chosen by the actor, this means Y wasn’t “valued” by the actor (as argued previously). Thus, theoretically, Y has no attribute of value, not having been sought or attained by an actor. Because Y has no attribute of value, precisely speaking, we cannot say that Y has “more” or “less” value to the actor than does X. X and Y are in this sense incommensurable; they cannot be judged or measured by the common standard of “value.”

The problem is that binary terms such as: least urgent/most urgent, smallest satisfaction/largest satisfaction, least important/most important, less valuable/more valuable, etc., imply two acts. If two acts are explicitly described in the formulation of the law, this introduces the problem of temporal separation. If the law is formulated in terms of only a single act X, then the problem shifts to terms such as more/less or larger/smaller that express a comparison of commensurable attributes, implying a second action by explicit reference.

The problem can be further elucidated if we put forth a simplified version of the law of marginal utility. The law of marginal utility expresses a necessary relationship between an actor’s supply and his valuing of that supply. We can easily conceive that when an actor attempts to attain X (an object or situation) this constitutes his valuing of X. Similarly, when an actor attempts to attain X, this constitutes his seeking a “supply” of X (“supply” here meant in the most general sense as a thing or situation the actor seeks because he currently lacks it). And thus, supply and value are necessarily related in action because the act through which an actor values X is the same act through which he seeks a supply of X.

This conception refers to only one action thus avoiding the problem of temporal separation. Furthermore, this conception requires no physical conceptual pairs such as “increase/decrease,” “more/less,” “higher/lower,” “internal/external,” etc. This simplified expression of the law of marginal utility is confined to saying something about the logic of action. It expresses an identity relationship. It does not try to say anything about the physical aspects of action—those aspects that may be measured or compared in terms of size, position, magnitude, intensity, etc.

On Classifying the Phenomena of Nature and the External World

In an introduction to praxeology, one often finds an attempt to distinguish between the objects of nature and physical processes on the one hand, and human actions on the other hand. Sanchez writes:

Action does not include non-purposeful change. For example, let us say a piece of wood from Crusoe’s ship also rises to the surface. This is not an action. The wood was not pursuing an end. It naturally floats in water due to its physical properties.

It is worthwhile to note that these distinctions are useless since all phenomena of the natural world become praxeological phenomena simply by considering them objects of action. For example, a lightning strike is seen, or observed, or heard. These are all actions. A chemical reaction is seen, or observed, or initiated, or described. These are all actions. There is no need to embark on a taxonomy of the objects of nature. We may translate any physical or “objective” phenomenon into a social or subjective phenomenon simply by conceiving the phenomenon in question as an object of action.

Conclusion

It is a positive development to see young writers take an interest in praxeology. It is also promising to see the growing realization of the breadth and comprehensiveness of Mises’s praxeological vision. One hopes that writers and scholars will begin to reexamine the social thought of Mises with more care and insight, and perhaps start to repair some of the damage done by the “praxeology as economics” misinterpretation that has been prevalent for so long. We close with a passage from Israel Kirzner:

“To be sure, the praxeological perspective embraces a range of human action far wider than that usually treated in economic theory. All human actions, motivated though they may be by the entire range of the purposes that have inspired and fired men to act, come within the sway of the ideal praxeological discipline.”

“Economic theory has traditionally dealt with the phenomena of the market, prices, production, and monetary calculation. In these spheres of human activity, theorists have developed constructions that help to explain the regularities these phenomena evince and to bring into clear focus the tendencies for change in these phenomena consequent upon given autonomous changes in the data.”

“The subject matter of economics came to be connected with the material things that are the objects of traffic in the market; it came to be linked peculiarly with the use of money in market transactions or with the specific social relationships that characterize the market system. Where writers came closest to the recognition that these criteria were only accidental characteristics of the affairs upon which economic analysis could be brought to bear, where they were able to glimpse the congenerousness of the specifically economic type of analysis with the underlying actions of men, they were unable to follow this clue to the conclusion to which it pointed. Precisely because those features in action that made it susceptible of economic analysis seemed common to all human activities, these writers were driven back to look for some other defining characteristic. And this meant again the search for some arbitrary quality to justify selecting the particular slice of pie that made up economic theory; but it meant in addition the relegation yet further into the background of the true recipe of that larger pie from which their conception of economics was being arbitrarily hacked.” (EPV-181-3)

Key

EOL – Rothbard, The Ethics of Liberty, 1998

EP – Mises, Epistemological Problems of Economics, 1976

EPV – Kirzner, The Economic Point of View, 1976

ES – Hoppe, Economic Science and the Austrian Method, 1995

GO – Gordon, An Introduction to Economic Reasoning, 2000

HA – Mises, Human Action, 1966

HH – Hayek on Hayek, 1994

HP – Knott, “Hayek and Praxeology,” 2013

I – Menger, Investigations into the Method of the Social Sciences, 1985

(A talk prepared for the International Conference of Prices and Markets, November, 2014)

Before proposing an answer to this question, I would like to state that by “libertarians”, I mean the broad group of people who seek an improvement in mankind’s condition by means of decreasing the scope of government. In my view, there are various schools of libertarianism. Each school of libertarianism is generally associated with a particular author or group of authors. In my writing and social thought, the term ‘libertarian’ does not refer to a particular school of libertarian thought, but instead refers to a general orientation of political thought. A libertarian in my conception is one who believes that mankind’s condition can be improved by decreasing the scope of government, and by increasing the range of individual autonomy.

Two Theories of Libertarianism

When libertarians have sought to articulate the reasons for their libertarian views, they have generally provided an explanation in terms of economics or in terms of ethics. The works of Ludwig von Mises may be considered an explanation of libertarianism given in terms of economics. Prosperity flowing from the division of labor is diminished when the government intervenes in the economy and is maximized when the government abstains from intervention. The best way to maximize prosperity is to minimize government intervention in the economy.

By contrast, the writings of Ayn Rand may be considered an explanation of libertarianism given in terms of ethics. She writes:

The basic political principle of Objectivist ethics is: no man may initiate the use of physical force against others…The ethical principle involved is simple and clear-cut…

The only proper, moral purpose of a government is to protect man’s rights…

Thus, Ayn Rand proposes to limit the scope of government on moral or ethical grounds.

An Explanation of Libertarianism

I would like to propose an explanation of libertarianism that is neither an economic explanation nor an ethical explanation. I use the word “explanation” deliberately, because I do not intend to defend or advocate libertarianism today; instead I want to answer the question: why are we libertarians, or, why are there libertarians? This may seem an unusual question to want to answer, but I hope that by the end of this talk, my reasons for framing the question in this way will become clear.

Categories of Consciousness

The most important concept I want to discuss today is the concept of “categories of consciousness.” What is a category? A category is simply a classification. For example, length is a category, and so is width. Most people probably consider length and width to be characteristics of various objects we see and interact with. For example, one might hold that a chair “has” a length and it “has” a width. Length and width are considered characteristics of the chair.

But it is also possible to consider length and width as categories of consciousness. We can assume that characteristics such as length, width, and others, are characteristics—or categories—of our perception. One of the most important essays written about praxeology is F. A. Hayek’s essay “The Facts of the Social Sciences.” Hayek writes:

In discussing what we regard as other people’s conscious actions, we invariably interpret their action on the analogy of our own mind: that is, …we group their actions, and the objects of their actions, into classes or categories which we know solely from the knowledge of our own mind.

We…always supplement what we actually see of another person’s action by projecting into that person a system of classification of objects which we know, not from observing other people, but because it is in terms of these classes that we think ourselves.

Hayek is referring to what we may call the epistemological method.

The Epistemological Method

The epistemological method is the thesis that the regularity we experience in natural and social phenomena is a function of the structure of our mind or consciousness.

Authur Eddington’s book The Philosophy of Physical Science is a book about the epistemological method. Eddington writes: “The epistemologist is an observer only in the sense that he observes what is in the mind.” We can attain physical knowledge by examining the results of various observations. But Eddington suggests we can also attain physical knowledge by examining the structure or form of observation itself.

For Ludwig von Mises, praxeological knowledge is the result of the epistemological method. He writes:

For as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind.

Human knowledge is conditioned by the structure of the human mind. If it chooses human action as the subject matter of its inquiries, it cannot mean anything else than the categories of action which are proper to the human mind and are its projection into the external world of becoming and change. All the theorems of praxeology refer only to these categories of action and are valid only in the orbit of their operation.

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Happiness and Unhappiness

Two of the most important categories in social science are the categories of happiness and unhappiness. When I say “happiness and unhappiness,” I’m referring to a general or formal notion. Happiness refers to a state of affairs that is acceptable to me and that I have no desire to change. Unhappiness refers to a state of affairs that is unacceptable to me and that I desire to change. By the terms happiness and unhappiness I mean only this formal conception. In this conception there are no degrees of happiness or of unhappiness. I’m either happy with a given state of affairs (i.e., I do not try to change it), or I’m unhappy with a given state of affairs (i.e., I try to change it).

Happiness and Unhappiness as Categories of Consciousness

In the common conception, we consider happiness and unhappiness to be characteristics of objects. Typically, happiness and unhappiness are conceived as characteristics of human bodies. Specifically, they are conceived as distinct experiences occurring within the spaces occupied by human bodies. A person may have an internal experience of happiness or of unhappiness. Happiness and unhappiness are located with, or within, that person; we cannot find happiness and unhappiness in the sand.

However, it is also possible to consider happiness and unhappiness as categories of consciousness. Instead of the conception that happiness and unhappiness are characteristics of things, we can assume that happiness and unhappiness are categories of our perception; part of the structure of how we experience and perceive things. This assumption has far-reaching implications for social theory. It means that we can find happiness and unhappiness in the sand.

In the common, every-day conception, happiness and unhappiness are states I experience within the confines of my own bodily enclosure. Likewise, the people I observe experience happiness and unhappiness within the confines of their own bodily enclosures. Happiness and unhappiness are conceived as events or processes that occur in distinct spatial locations. Additionally, there are objects such as rocks, trees and metal coins that I observe, and that simply “exist.” They do not experience happiness or unhappiness. There is no happiness or unhappiness to be found in the spaces occupied by these objects.

When we conceive happiness and unhappiness as categories of consciousness, this view of things changes radically. Happiness and unhappiness are now conceived as forms of my consciousness, not as characteristics of some objects of my consciousness. In this conception, I find happiness and unhappiness in different places not because happiness and unhappiness are “located” there; but instead because happiness and unhappiness are forms of my perception. When objects enter my conscious field—my own body, other people, houses, mountains, books, etc.—I will experience happiness and unhappiness for the simple reason that all objects of my conscious awareness are constituted of consciousness categories. The same principle applies when the objects in my conscious field are social phenomena—for example, when I interact with another person, or when I purchase an item online.

The conception of happiness and unhappiness as categories of consciousness means that my every differentiable conscious experience is constituted of these categories. It means that every object of my conscious awareness entails a happiness and unhappiness aspect.

If we conceive consciousness in terms of categories, we can then study how various social phenomena in our conscious field are constituted in terms of these categories. We can better understand how various forms of social interaction impact our happiness by understanding how these forms of social interaction are constituted in terms of our consciousness categories.

Happiness, Unhappiness, and Social Interaction

Consider the following two instances of social interaction: in one instance, I conduct a face-to-face transaction with another person; in another instance, I make a purchase online. In each of these cases there are both observable and unobservable aspects of the transaction. For example, in a face-to-face transaction, I can observe various aspects of the other person in front of me, but I do not observe the mind of that person (that person’s thoughts, goals, motives, or intentions). When I purchase an item online, I can observe the computer screen and keyboard in front of me, but I do not observe the circuitry inside the computer screen or inside the keyboard.

Though both kinds of social interaction entail aspects I do not observe, I may find that sometimes I do not accept the unobservability, but instead take steps to find out more about the things I do not currently observe. For example, I may find it unacceptable that I don’t know the motives of the person in front of me, and so I may attempt to ascertain what his or her motives are. This attempt to change a state of affairs—from not knowing the person’s motives to knowing the person’s motives—is the definition of unhappiness discussed previously. On the other hand, there are times when I accept the unobservable aspect of the things I do and make no attempt to observe things that are currently unobservable to me. For example, I may just accept that I do not observe the circuitry inside my keyboard and make no attempt to change this situation. The absence of a desire to change a given situation is the definition of happiness discussed previously.

If I find that I habitually attempt to change the unobservability inherent in some forms of social interaction (and experience this attempt as unhappiness), this may lead me to choose instead other forms of social interaction of which the unobservable aspects I accept, thus experiencing happiness in the absence of a desire to change the unobservable aspects.

Social Interaction and the Market System

In theoretical terms, there are two distinctly different ways in which I can interact with other people. First, I can interact with a person while that person’s mind is “present” to me. This is what we might call direct person-to-person social interaction. In my theory, I refer to this kind of social interaction as interpersonal action. In an interpersonal action, I address or interact with another person’s mind in the sense that the other person’s mind is present in my conscious field. In interpersonal action, I locate another mind in my conscious field, and I direct my actions or communications toward that mind. Examples of interpersonal action are: face-to-face conversations, telephone conversations, and generally any instance in which, from my own point of view, I interact with another mind (for example, when I issue a command or threat).

Alternatively, I can interact with another person while that person’s mind is not “present” to me, for example, by making a purchase from a vending machine. As a practical matter, I understand that another person will be part of my vending machine transaction at some point in time. However, during the time I make the vending machine purchase, I need not direct my actions or direct any communications toward another mind. I may make a vending machine purchase without another person’s mind appearing in my conscious field. Examples of this type of social interaction include street signs, maps, recordings, books, automated bank teller transactions, and Internet purchases. We can also consider the price system as an example of social interaction that does not entail interpersonal action. I may post a price without addressing another mind, and similarly, another person may observe this price without addressing another mind. In this sense, the price system enables social interaction to occur without interpersonal action.

Thus, the market or price system may be understood as a technique for engaging in social interaction and social exchange without engaging in interpersonal action. The market system allows me to obtain the benefits of social exchange without having to address or interact with another mind.

As previously indicated, the different forms of social interaction are not neutral with respect to my personal happiness. In some forms of social interaction I may seek to observe the unobservable aspects of the interaction or exchange. In other forms of social interaction I may not seek to observe the unobservable aspects of the interaction or exchange. If I habitually attempt to observe the unobservability inherent in interpersonal action (and experience this attempt as unhappiness), this may lead me to prefer social interaction via the market system, in which I do not try to observe the unobservable aspects of the exchange (experiencing the absence of a desire to observe the unobservable as happiness). In this sense, social exchange via the market system may be understood as a technique for attaining or increasing personal happiness.

Coercion and the Market System

By the term “coercion” I do not mean violence or assault or aggression. By coercion I mean a certain kind of trade or exchange. When I coerce someone, I threaten that person with some harmful consequence and then offer to withdraw the threat of harm in exchange for something I want from that person. Much of what government does is based on this type of coercive exchange. The government threatens its citizens with various forms of harm and then offers to withdraw the harm if the citizens obey its laws and regulations. When I say “coercion,” I’m referring exclusively to this kind of social exchange.

If I want to employ coercion, I must locate within my conscious field an entity that I believe will be responsive to coercion. In the current context, this means I must locate another mind toward which I can direct my coercive action or communication. The location of another mind within my conscious field is interpersonal action.

As previously mentioned, the price system enables social interaction to occur without interpersonal action. And this is an important link between libertarianism and the market or price system. Coercion, an essential instrument of government action, requires interpersonal action. The expansion of the price system implies a diminishment in interpersonal action and thus a diminishment in coercion, the basis of non-libertarian society. This is one reason why libertarians call for an expansion of the market system and non-libertarians call for its diminution. As forms of social interaction not requiring interpersonal action expand, opportunities for coercion—the basis of non-libertarian society—are diminished.

Why Are We Libertarians?

We are libertarians because we seek to attain greater personal happiness by expanding the market or price system. The market system is a technique that enables social interaction to occur without interpersonal action. As the market system expands, opportunities for coercion are diminished. This implies a contraction of non-libertarian society, in which coercion by government plays a large role.

Praxeology and Consciousness Categories

As you can see, the theory I’ve presented today is neither an ethics theory nor an economic theory. I have not explained libertarianism in terms of justice or in terms of material prosperity. Instead, I have described libertarianism in terms of consciousness categories.

One of the long-standing problems of social science concerns the structure of social interaction from the point of view of the individual consciousness. As Alfred Schutz wrote in his book The Phenomenology of the Social World:

We must, then, leave unsolved the notoriously difficult problems which surround the constitution of the Thou within the subjectivity of private experience. We are not going to be asking, therefore, how the Thou is constituted in an Ego…As important as these questions may be for epistemology and, therefore, for the social sciences, we may safely leave them aside in the present work.

The theory I have presented today is a praxeological theory in the Mengerian/Misesian tradition. Here is how Carl Menger describes “exact theory” in the realm of social phenomena, the discipline that Mises later named praxeology:

The nature of this exact orientation…consists in the fact that we reduce human phenomena to their most original and simplest constitutive factors…and…try to investigate the laws by which more complicated human phenomena are formed from these simplest elements, thought of in their isolation.

In my work, I try to show how complex social phenomena are formed from elemental consciousness categories, and in so doing, help us to understand why we are libertarians.

The goal of praxeology is to discover and to make explicit “exact laws” of human action of the general form “if you do X, then Y must necessarily happen or result.”

The reason economics has had some success in this is because economics deals largely with what one may call “calculative action” or what Mises referred to as “catallactic action.” Because economics treats the money economy, it deals with countable units that can be mathematically manipulated. And thus when we read Mises’s description of two laws of economics, the law of returns and the law of marginal utility, we will see that he introduces simple mathematical symbols such as n-1 or p/q.

The laws of economics, or the law-like propositions of economics, seem to be formulable due to the fact that economics deals with the money economy and the assumption of identical money units subject to simple or complex mathematical operations. For example, one of the fundamental notions of Austrian economics is the notion that when the government prints more money, this money printing does not increase the amount of goods and services offered in the economy, and thus the ratio between the monetary unit and the available goods and servicesnecessarily changes. This reduces to a simple mathematical comparison of n+1/1 to n/1.

We conclude that economics is able to formulate law-like propositions of exactness primarily due to the fact that economics assumes identical money units (or identical commodity units) to which mathematical operations may be applied.

B.

Must exact laws of human action be strictly mathematical in nature, or are there other kinds of exact laws of human action? Due to mathematics we may say “if I have 4, and I take away 2, then I will have 2.” This is an “exact” law-like proposition concerning the action of taking away 2 units, and the exactness seems to derive from our ability to apply mathematics to the action in question. But are there non-mathematical exact-law propositions that may be formulated about human actions?

Two examples cited in the past are:

1. In walking toward a location (action X), one must necessarily walk away from a different location (necessary result Y).

2. If one makes an automobile more fuel efficient by making the automobile more aerodynamic, one necessarily makes the automobile harder to bring to a stop (i.e., the braking power needed to bring the car to a stop in the same distance must increase).

Thus, it is possible, in principle, to formulate exact laws of human action that are non-mathematical in the sense that they do not require or assume a number of identical units to which mathematical operations are applied. The actor performs an intentional action: he walks toward a location, or he makes a car more fuel efficient by improving its aerodynamics. To these intentional actions necessary consequences or results are attached—results or consequences that were not the conscious intention of the actor. The result or consequence Y is a necessary “accompaniment” to the action X that the actor performs.

This indicates that the essence of necessity in human action is not mathematical in nature (in the sense of numbers or mathematical operations or ratios). The essence of necessity in human action is an identity relationship. By “identity relationship” we do not mean A = A. By “identity relationship” we mean a demonstration of an identity between A and B, such as:

12 x 2 = 3 x 8

12 x 2 and 3 x 8, are not identical in every respect. They are only identical in a circumscribed and specific respect, and we conceive mathematics as an exact science that demonstrates the specific sense in which the action of multiplying 2 by 12 is identical to the action of multiplying 3 by 8.

Similarly, walking toward a location and walking away from a different location are not identical in every respect. But we can see that walking toward a location is the same thing as walking away from a different location in some respect. The respect in which walking toward a location (phenomenon A) is the same as walking away from a different location (phenomenon B) we call the identity relationship.

In his essay “Economics and Knowledge,” Hayek referred to these identity relationships as “tautological transformations,” and he referred to praxeology (which he called the Pure Logic of Choice) as “the system of tautologies—those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start.”

In this kind of procedure, we begin with an assumption (in our case, action X), and we show how action X must necessarily entail Y, a necessary accompaniment which may not be fully recognized by the actor who performs action X. Result Y is the so-called “unintended consequence.” As Lionel Robbins explains in An Essay on The Nature & Significance of Economic Science:

The analytic method is simply a way of discovering the necessary consequences of complex collocations of facts—consequences whose counterpart in reality is not so immediately discernible as the counterpart of the original postulates.

We conclude that it is possible to formulate non-mathematical exact laws of human action. The essence of these exact laws is an identity relationship—a demonstration of the sense in which A and B are identical.

C.

Interpersonal Action

So far we have dealt with “calculative” or “catallactic” actions (the subject matter of economics), and we have dealt with “physical” or “spatial” actions such as walking toward a location or changing the shape of a car.

The most important realm of human action for libertarian social thought is the interpersonal realm of human action. Interpersonal actions are actions in which one actor acts toward another actor. This is the area of human action that has up until now been the province of traditional ethics, objective ethics, natural law ethics, and recently, the argumentation ethics. The goal is now to treat this realm of action as a branch of praxeology, and this means the attempt to demonstrate exact laws (similar to what was discussed above) in the interpersonal realm of human action.

We define an interpersonal action as an action in which the mind (consciousness) of another actor is the object of one’s action. An interpersonal action occurs when actor A “locates,” in the field of his own mind or consciousness, the mind or consciousness of another actor B. In other words, for me, an actor, an interpersonal action happens when another person’s mind or consciousness “appears” (in a sense yet to be described) in my consciousness field. When another mind or consciousness is the object of my action (is the object of my intentional consciousness), this “is” (this constitutes) an interpersonal action.

(If I merely interact with a warm body, this is not necessarily an interpersonal action. Interacting with another object may simply be a physical action. An interpersonal action is the specific case when the object with which I interact is a mind or consciousness similar to my own.)

If interpersonal action occurs when another mind or consciousness appears as the object of my mind or consciousness, then the question becomes: what is the identity relationship or tautological transformation concerning this assumed situation, analogous to the identity relationships discussed above? The identity relationship or tautological transformation that we may demonstrate, applied to the case when another mind or consciousness is the object of my mind or consciousness, will be an exact law of interpersonal action, given the definition of interpersonal action above.

D.

The Structure of Interpersonal Action

When we speak to another person face-to-face, or speak to another person on the telephone, we act under the assumption that we are in the presence of another mind or consciousness similar to our own. When we interact socially, we isolate or locate within the field of our consciousness another mind toward which we direct our communications or actions. For example, when we lie, we lie toward another mind. This implies that we have located another mind in some specific realm or region of our overall field of consciousness. (I don’t direct my lie to the empty sky or toward a rock; I direct it to another mind in order to deceive that other mind)

When we examine the nature of the other mind that we locate (in order to direct our actions or communications toward it) we will find that the other mind never belongs to the category of things we may observe sensually or perceptually. The other mind is always and at all times something that “presents” to us as an “unobservable.” When I am in the presence of another mind, the other mind is not present to me in the same sense as the front half of the basketball I see; rather, when I am in the presence of another mind, the other mind is always present to me in the same sense that the back half of the basketball is present to me. I.e., another mind, when present, is always present to me as a non-perceptible or non-observable “presence”—something that is “there now” but not now observable. Just as the back half of a basketball is “present” now, but not now observable, when I interact with another person, the mind I interact with is “present” now, but not now observable.

Thus, for our consciousness, there is a class or category of things that “appear” for us, not as observable things, but as non-observable things. This category includes things such as other minds, the other side of objects, the inside of objects, concepts, and other entities of similar nature. These are “things” that are “present” to us in the sense that we locate them within the field of our consciousness though we never observe them. We may refer to this category of “things” as the category of non-perceptible (or non-perceptual) presence.

Thus, there are at least two categories of consciousness (and in the present theory, only two categories of consciousness):

1. A category of perceptual presences (visual sensations, audible sensations, tactile sensations, olfactory sensations, imagined or mental images or sounds, etc.). This is the class of things that “present” to my consciousness perceptually.

2. A category of non-perceptual presences (as just described and defined).

E.

Two Categories of Consciousness

These two categories of consciousness ultimately derive from the same source as the social-scientific category pairs supply/demand and supply/value. (supply/value is the category pair on which the law of marginal utility is based)

Each of these pairs consists of a category of an object of action (the supply) and a category of an intangible/immaterial “attitude” of the actor in relation to that object (demand or value).

Demand and value as we conceive them are of the same nature as the concept of utility: they are conceived as an actor’s immaterial and intangible “attitude” toward the object of his action. These things (demand, value, utility, etc.,) are not considered “extended” entities having spatial dimensions or observable characteristics.

The category pair means/ends is, we will argue, of this same essential structure. The “end” of the actor is identical to his purpose or intention. These all refer to the same thing: the immaterial “attitude” of the actor in relation to the object of his action (the means).

Thus, we have several examples of fundamental category pairs of social science: supply and value, supply and demand, means and ends. The recurring pattern is: the object of the actor’s action in relation to the actor’s immaterial/intangible attitude toward the object of his action.

We view these category pairs as historical social concepts reflecting an underlying structure of consciousness. In other words, the category pairs of social science and social thought have been conceived in different ways throughout history, but all have derived from the fundamental binary structure of consciousness. There is a category of things that appear to a consciousness perceptually; things that may be sensed, imagined, or observed. This is the aspect of consciousness from which the historical social-scientific categories supply and means have been derived. There is a category of things that appear non-perceptually or that are “non-perceptually present.” This is the aspect of consciousness from which the historical social-scientific categories demand, value, ends, purposes, intentions, utility, etc. have been derived.

F.

Category Pairs: History

The category pairs supply/demand and supply/value were developed within the science of economics, which as mentioned, treated the money economy and included the assumption of identical monetary or commodity units. The assumption of identical monetary or commodity units made possible the introduction of mathematical operations (n-1, p/q, etc.) which in turn made possible the formulation of law-like propositions in regard to the economic (catallactic) aspect of human action. This bestowed the social science of economics, to some extent, with an aura of scientific legitimacy.

By contrast, category pairs such as happiness/unhappiness, satisfaction/dissatisfaction, pleasure/pain, ease/unease, means/ends, etc., though ultimately derived from the same binary structure of consciousness as supply/demand and supply/value, were generally developed within branches of social study that could not make the assumption of identical units subject to mathematical operations (e.g., the disciplines of ethics, morals, and political science). For this reason, these branches of social study were prevented from formulating law-like propositions of exactness that applied in their field, or were prevented from formulating law-like propositions of equal stature to those put forth by economics. These disciplines were generally denied the aura of scientific legitimacy.

The most significant difference between the former and the latter group of category pairs however, is that economic theory evolved in such a way that the concept “supply” on the one hand, and the concepts “demand” and “value” on the other, came to denote entities of a fundamentally different nature. Broadly speaking, by “supply,” one means the objective quantity or amount of a thing available for utilization by a person or group. By “demand” or “value,” one means a kind of assessment of the supply on the part of a person or group (the aforementioned “attitude” of the person toward the supply). “Demand” means the person wants more of a thing, implying an assessment of an insufficient supply. “Value” is an assessment of the importance of the thing to the person and implies an attempt to gain or keep the thing in question. One concept (supply) refers to the object; one concept (demand or value) refers to the actor’s “attitude” toward the object.

If we look at the second group of category pairs—those that were developed outside of economic science—we will notice that the intra-pair relationship is not the same as the intra-pair relationship of the economic category pairs. In the second group of category pairs, the entities referred to in each pair are generally considered entities of the same nature. For example, “pleasure” is a kind of feeling experienced by a person, and “pain” is a kind of feeling experienced by a person. The same holds for the category pairs happiness/unhappiness, satisfaction/dissatisfaction, ease/unease, etc. One may have the experience of happiness, or one may have the experience of unhappiness. The two conceptions are fundamentally alike in the sense that both refer to a kind of experience that an individual may have.

The situation surrounding means and ends is slightly more complex. We can say at a minimum that means and ends are generally considered similar with respect to the way an individual would verify their presence or attainment. An individual verifies the presence of a particular means he is utilizing by perceiving or observing those means. I see the shovel I intend to use to dig a hole. Similarly, an individual verifies that the end he sought has been attained by perceiving or observing that the end has been attained. I see the hole which it was my intention to dig. Means and ends are generally considered entities of a similar nature in the sense that both are considered to be, at least in principle, perceptible or observable entities.

The essential point is that the conception of the category pairs of theoretical economics has evolved further than the conception of the category pairs of the normative disciplines. In economics, the development of the category pairs has been toward a conception in which each category denotes an entity of an altogether different nature. In the normative disciplines, each category of the category pair tends to denote an entity of an essentially similar nature.

G.

Category Pairs: Reconception

The foregoing considerations imply that theoretical advancement in the fields subsumed by the normative disciplines is dependent on the evolution of the conception of the category pairs employed by these disciplines. Specifically, these category pairs must be reconceived such that each category denotes an entity of a fundamentally different nature. In the present theory for example, we conceive means as those things in action (in consciousness) that are perceptible, sensible, observable, etc. (this includes all “mental” perceptions, sensations, imaginings, etc.). By contrast, we conceive ends, or the end, as fundamentally nonperceptible and nonobservable. An end, qua end, can never be perceived, sensed, or observed; only means can be perceived, sensed, or observed. In the present theory, ends belong to the category of nonperceptible presences; the category of things that—from the actor’s point of view—are the nonobservable aspect of what the actor is now doing.

Mises is working with a similar conception of the means/ends relationship. In his conception ends are considered beyond rational or scientific treatment, and only means can be assessed rationally or scientifically.

As soon as people venture to question and to examine an end, they no longer look upon it as an end but deal with it as a means to attain a still higher end. The ultimate end is beyond any rational examination. All other ends are but provisional. They turn into means as soon as they are weighed against other ends or means.(TH-14)

As soon as we start to refute by arguments an ultimate judgment of value, we look upon it as a means to attain definite ends. But then we merely shift the discussion to another plane. We no longer view the principle concerned as an ultimate value but as a means to attain an ultimate value, and we are again faced with the same problem.(TH-23)

In fact, he who passes judgment of an alleged end, reduces it from the rank of an end to that of a means. He values it from the viewpoint of an (higher) end and asks whether it is a suitable means to attain this (higher) end.(MM, 22-23)

As these passages demonstrate, Mises was aware that to examine a thing (X) with regard to its suitability, is to examine it with regard to its suitability for purpose Y, and therefore X is examined as a means to attain Y. We cannot examine “ends” with respect to their suitability or fitness. When an entity is in my conscious view such that I can “examine” it in some regard, it thereby occupies a definable categorial “location” in my consciousness. Every object or entity brought into my conscious view occupies this same categorial “location.” This particular category Mises refers to as means.

The present theory explains the nonrationality of ends to which Mises refers in terms of a category of nonperceptual or nonobservable “presence.” This category is comprised of things that from the actor’s point of view are “present” but not presently observable (e.g., the mind of another person the actor is addressing, the back side of a wall, the inside of a box, etc.). The category of ends and the category of nonperceptual presence are identical. By contrast, the category means refers to those things that are perceptually present to the actor; those things that the actor presently perceives, observes, or senses. The two categories thus refer to “objects” of a fundamentally different kind.

The foregoing considerations imply that the category pair happiness/unhappiness (satisfaction/dissatisfaction, pleasure/pain, ease/unease, etc.) should be reconceived so that each category refers to an object of a fundamentally different nature. Following what has been discussed regarding the category pairs supply/demand, supply/value, and means/ends, this means we will conceive one of the categories (e.g., happiness) as referring to that which is perceptible, sensible, or observable to a consciousness, and we will conceive the other category (unhappiness) as referring to those things in consciousness that are “present” but not presently perceptible.

Let us make a brief sketch of our proposed reconception in relation to the historical conceptions of the binary category pairs.

H.

Category Pairs: Reconception

In economics, the category pairs supply/demand and supply/value were conceived such that each category refers to an object of a fundamentally different nature: 1) and object, and 2) an “attitude” toward that object on the part of an actor. In this conception, the object is (generally) conceived as belonging to objective, extended nature, while the “attitude” is generally conceived as belonging to the actor or “subject.” The object (the supply) is considered an “objective” entity while the actor’s “attitude” is considered a “subjective” entity.

By contrast, in our proposed reconception, the object is considered a subjective entity. In this conception, the term “object” refers to the perceptual or sensual or observational content of a consciousness (“object” here does not refer to an entity assumed to exist independent of conscious awareness). We are conceiving the entire field of one’s conscious awareness in terms of two categories: 1) a category of the perceptions, sensations, or observations, that appear to this consciousness (or that constitute it), and 2) a category of “things” that are present to this consciousness, but not presently observed, perceived, or sensed by it (the aforementioned nonperceptible presences). In this conception, the notion “object” refers exclusively to the perceptual content of a consciousness.

Thus, in our conception, it is this subjective object that stands in relation to the actor’s immaterial “attitude.” In this conception, the object, and the attitude related to this object, are both aspects of the actor’s consciousness; they are both subjective phenomena.

Turning back to the economic category pairs supply/demand and supply/value, when the actor possesses an attitude of “demand” or of “value” toward a given supply, in our conception “supply” refers to the perceptual/observational/sensible content of his consciousness, and only to this content. The “object” is that which is currently present to a consciousness as a perception, sensation, or observation. This object (or perceptual content), in combination with the nonperceptual presence (the actor’s immaterial “attitude”), constitutes the totality of the actor’s conscious field (the totality of the actor’s conscious awareness). This conception, entirely subjective, wherein the various phenomena are conceived as aspects of a single consciousness, implies a corresponding subjective conception of economic science. It was this entirely subjective conception of economics that Mises practiced and advocated, and that Hayek was referring to in his fateful essay “Economics and Knowledge.”

It is important to remember that the so-called “data,” from which we set out in this sort of analysis, are…all facts given to the person in question, the things as they are known to (or believed by) him to exist, and not, strictly speaking, objective facts. It is only because of this that the propositions we deduce are necessarily a priori valid and that we preserve the consistency of the argument.

[In this sort of analysis] “data” meant those facts, and only those facts, which were present in the mind of the acting person, and only this subjective interpretation of the term “datum” made those propositions necessary truths. “Datum” meant given, known, to the person under consideration.

It was this entirely subjective conception of economics that Hayek argued against in “Economics and Knowledge,” and it was partially due to Hayek’s arguments that this subjective approach to social phenomena was abandoned within the economics profession. Since that time, the underlying epistemological structure of economics has consisted of both objective and subjective elements, and economists have implicitly assumed these elements are theoretically commensurate, as one would in assuming that a carved wooden “X” is interchangeable with the mathematical symbol “X.”

I.

Category Pairs: Reconception

We now turn to the non-economic category pairs such as happiness/unhappiness, satisfaction/dissatisfaction, pleasure/pain, and means/ends. In the traditional or standard conception of the non-economic category pairs, both categories refer to a subjective phenomenon, and to a phenomenon considered—at least in principle—observable or perceptible to the person in question. Generally speaking, both categories refer to subjective entities that the actor may see, feel, experience, or observe. The actor can experience happiness and the actor can experience unhappiness. The actor can see his means, and the actor can see his end, etc.

By contrast, our reconception of the non-economic category pairs consists of reconceiving one of the categories (for example, unhappiness, dissatisfaction, pain, and ends) as a category of nonperceptual presence. In our conception, one category consists of entities that are perceivable or sensible or observable by the actor, while the second category consists of entities that are present but not presently perceivable, sensible, or observable by the actor.

It is important to note that in this conception there is no conceived temporal separation between the two categorial phenomena that constitute the actor’s conscious awareness. The nonperceptual presence is “copresent” with the object that is perceptually present to the actor. The backside of the wall is copresent with the wall; the inside of a box is copresent with the box; the mind of another person is copresent with that person, etc.

Below we list the different historical conceptions and the proposed reconception:

Notes: 1. Here we assume that the actor’s “demand” or “value” in regard to the supply has traditionally been conceived as perceivable or sensible to the actor himself. 2. The categories happiness/unhappiness are here considered identical to those of satisfaction/dissatisfaction, pleasure/pain, ease/unease, etc.

Part 2 – Theory and Structure

A.

Our goal is a praxeological theory of interpersonal action. This means the attempt to conceive exact laws of human action in the interpersonal realm of human action. A theory of necessity linking two nonidentical entities requires an atemporal identity relationship between the two entities.

In the present theory, we conceive consciousness in terms of two categories: a category of perceptual presences, and a category of presences not perceived. This conception of consciousness is a rendering from the point of view of the individual, unitary, conscious subject. There are fundamentally two categories of “things” that constitute my conscious field: those things that appear to me perceptually (perceptions, sensations, imaginings, mental images, etc.), and those “things” that are present, but which I do not presently perceive, sense, or have a mental image of.

A simple theory of interpersonal action is implicit in this general theory of consciousness structure. The mind or consciousness of the person with whom I interact belongs to the category of things that are present to me, but which I do not presently observe. The perceptual or sensual aspects of this person (the body I see, the voice I hear, etc.) belong to the category of things perceptually present to me. The person with whom I interact is thus entirely constituted of these two fundamental consciousness categories. In other words, the person with whom I interact is constituted of two distinct parts (categories) of me, the unitary consciousness. This is a subjective as opposed to an objective conception of social interaction.

This theory of the structure of consciousness solves the problem that Alfred Schutz referred to in The Phenomenology of the Social World:

We must, then, leave unsolved the notoriously difficult problems which surround the constitution of the Thou within the subjectivity of private experience. We are not going to be asking, therefore, how the Thou is constituted in an Ego…As important as these questions may be for epistemology and, therefore, for social science, we may safely leave them aside in the present work. (1972, p. 98)

The “Thou” (the person with whom I interact presently) is constituted within the subjectivity of my private experience of two classes of things. On the one hand, the Thou is constituted of perceptual presences (visual sensations, audio sensations, tactile sensations, olfactory sensations, etc.). On the other hand, the Thou is constituted of “presences” that are not perceived (the back side of the person, the inside of the person, the mind of the person, etc.). The mind of the person with whom I interact belongs to the category of things that are present to me (I believe this person’s mind is “here now,” with this person) but not presently observable or perceivable by me.

B.

The present theory is essentially a theory about the structure of consciousness. We conceive consciousness as a binary structure. We interpret the various historical concept pairs of social science and social thought (e.g., supply/demand, supply/value, means/ends, happiness/unhappiness, pleasure/pain, satisfaction/dissatisfaction, good/bad, moral/immoral, just/unjust, etc.) as having derived from the two fundamental consciousness categories.
The binary nature of our consciousness renders our conscious experience in binary form, and we in turn express this experienced binary form in various ways in our social science and social thought. The different concept pairs signify the different ways we have interpreted the binary structure of our consciousness throughout history.

I, actor A, am constituted, as it were, of two categories: a category of perceptual presences, and a category of presences not perceived. We define interpersonal action as occurring for actor A when the mind or consciousness of another actor (B) is “present” for A. As previously argued, from the point of view of A, the mind or consciousness of B belongs to the category of those things present to A, but not presently observed by A. B‘s mind is “present” to A as a nonperceptual presence. We define interpersonal action as the situation in which the particular nonperceptual presence present for A is the mind or consciousness of another actor B.

It is important to note that in our conception of interpersonal action, the presence of the mind of actor B (as a nonperceptual presence) is consistent with any set of perceptual contents present for actor A. For example, let us assume that A is on the telephone with B. We assume B‘s mind is present for A as a nonperceptual presence. This constitutes interpersonal action for actor A. Also present for A are perceptual presences (e.g., B‘s voice, the sight of the telephone, the touch of the telephone, etc.).

Let us now assume that during the telephone conversation person B stops speaking. We assume further that B‘s mind is nonetheless present for A as a nonperceptual presence (A believes he is still in the “presence” of B even though B is not currently speaking). In this case, the voice of B is not one of the perceptual presences present for A, though A is still engaged in interpersonal action. This is because the defining characteristic of interpersonal action is the presence of the mind of another actor B, and the presence of the mind of another actor B,as something that does not appear perceptually, is consistent with any set of perceptual contents appearing for actor A. In our conception, the phenomenon of interpersonal action is entirely independent of the perceptions, observations, or sensations present to A during interpersonal action.

C.

An Exact Law of Interpersonal Action

Above, we have defined interpersonal action in terms of the fundamental category pair “perceptual presence/nonperceptual presence.” If we now substitute for the fundamental category pair some of the historical category pairs we obtain some interesting results. Recall that we had discussed category pairs such as supply/demand and supply/value, and we had conceived that the term “supply” referred to the object of the actor’s action while the terms “demand” and “value” referred to the actor’s immaterial “attitude” toward the object of his action. What we had in mind was a conception, analogous to the fundamental category pair (perceptual presence/nonperceptual presence) in which “supply” refers to those things in action (in consciousness) that are perceptible, observable, and sensible, while “demand” and “value” refer to that in action which is nonperceptible, nonobservable, and nonsensible. Here, we are reconceiving the category pairs supply/demand and supply/value to conform to the conception of the fundamental category pair, so that “supply” is identical to the category of perceptual presence, and “demand” and “value” are identical to the category of nonperceptual presence.

Returning to the notion of interpersonal action then, if we use the older terminology (use the older terms that express the binary nature of consciousness) we would conceive that when actor A is engaged in interpersonal action, those things that are perceptible or sensible or observable to A would constitute his “supply,” while those things present to him, but not presently perceptible, would constitute his “demand” or his “value.” We are simply giving the older names to the newly conceived categories.

If we make this same substitution using the older category names happiness/unhappiness, satisfaction/dissatisfaction, pleasure/pain, then we obtain the result that those things perceptible to A during interpersonal action constitute his “happiness” (or satisfaction, or pleasure) while those things nonperceptually present to A during interpersonal action constitute his “unhappiness” (or dissatisfaction, or pain).

Thus, we have an identity relationship or “tautological transformation.” Interpersonal action occurs when the mind of actor B appears in the conscious field of actor A. The mind of actor B appearing in the conscious field of actor A is a nonperceptual presence appearing in the conscious field of actor A. A nonperceptual presence appearing in the conscious field of actor A constitutes unhappiness (or dissatisfaction, or pain) for A. Interpersonal action thus constitutes unhappiness (or dissatisfaction, or pain) for actor A.

This insight was the basis for an earlier version of the present theory presented in Striving and Attainment (2008, pp. 98-107). When we conceive consciousness and human action in terms of the two categories happiness/unhappiness (satisfaction/dissatisfaction, ease/unease, pleasure/pain, etc.), there is a sense in which we can conceive a necessary relationship between interpersonal action and human happiness.

D.

Original Insight

The theory of interpersonal action is based on a prior theory of social interaction conceived in terms of “striving” and “attainment.” (Knott, 2008, 2006) In these earlier presentations, satisfaction (or happiness) was conceived as a situation in which a “striven for” want changes to an “attained” want. When the thing or state striven for by the actor is attained, this constitutes happiness or satisfaction for the individual. This is a formal conception and does not refer to the particular or concrete content that may be striven for or attained. Consciousness was conceived as a simple intentional structure in which striven for things are continually changing to attained things constituting the experience of satisfaction or happiness for the individual concerned. Unhappiness or dissatisfaction was conceived as the reverse situation in which an “attained want” changes to a “striven for want” for the individual. Thus, there were two conceived states which the entities of intentional consciousness could “occupy.” For an actor, an entity may be “attained” or an entity may be “striven for.” These were conceived as the two primary categories of intentional consciousness (categories of action).

How is an actor aware that a thing he has striven for has become a thing attained? The answer given is that “attainment” entails the “presence” of a perception or observation. A person “attains” ice cream when a person sees or holds or tastes ice cream. A person “attains” approval when a person hears, reads, or observes approval. We conceive that the observation or perception of an entity by an individual is identical to the individual’s “attainment” of that entity. Here, the individual “attains” an object not in a normative or social or legal sense, but rather in a perceptual or observational sense. Those things that enter the conscious field of the individual (those things the actor perceives, observes, or senses) are “attained” by him. And as indicated, things are attained as satisfaction for the individual. Or, for the individual consciousness, “attainment” constitutes satisfaction.

The insight giving rise to the theory of interpersonal action was that if attainment constitutes satisfaction, and if there are entities that cannot be attained, then such entities may impact the happiness of the consciousness that strives to attain them.

The defining characteristic of “direct” social interaction (which we refer to as interpersonal action) is when the mind of another actor (B) is the object of actor A‘s action. Given the two categories of consciousness—striving and attainment—the mind of actor B must either be striven for or attained by actor A. (To understand our meaning it may be helpful to think in terms of the thoughts or intentions of actor B. When we speak of the “mind” or “consciousness” of actor B, we’re referring to the unobserved (by A) thoughts and intentions of B as contrasted to theobservable aspects of B.) If actor A can “strive” for the thoughts and intentions of actor B but cannot “attain” them, then in some sense yet to be defined, such striving cannot result in happiness for actor A.

The original conception was that market transactions in which an actor does not refer to the mind of another person are somehow “objective.” An example is a transaction in which the actor deposits a coin in a vending machine. In this transaction, the actor interacts with a physical coin and a physical vending machine and need not refer to the thoughts or intentions of another actor. By contrast, when one actor coerces another, he must manipulate the “wants” of the other actor in order to do so (i.e., in order to coerce person B, I must change the goals of person B so that person B gives me what I want). The goals of person B (his intentions, purposes, thoughts, etc.), as mental phenomena of person B, are not “objective” to me in the same way that a physical coin or vending machine is “objective” to me. And this suggests that when I seek to coerce another person by seeking a change in the mind of that person, I cannot “attain” this change in the same way I can attain an item from a vending machine. My striving for the mental entities of another person cannot result in their attainment (as happiness) in the same way that my striving for physical objects can result in their attainment (as happiness). This suggested a possible reason, grounded in action/consciousness categories, why an actor may prefer “objective” market exchanges over coercive exchanges.

The theory is an attempt to provide a “scientific” basis for certain libertarian intuitions about social interaction and the market process. Libertarian social theory advocates the market economy over the command economy. And libertarian social theory generally objects to the use of coercion as a means of social exchange. The question is whether a basis for these preferences can be found in human nature.

Part 3 – Interpretation

A.

The theory of interpersonal action explains the libertarian preference for market society in terms of the structure (the categories) of consciousness (what Mises referred to as the structure or categories of action). Libertarian economic theory explains the preference for market society in terms of the abundance or paucity of goods, the efficiency or inefficiency of the distribution of goods, and the impact on standards of living resulting from policies intended to restrict or influence market transactions. Libertarian ethics theory explains the preference for market society in terms of ethical conduct. Market society is the corollary of good or just social conduct; the command society is the corollary of evil or unjust social conduct.

The theory of interpersonal action provides an explanation of the libertarian preference for market society that is independent of the material (the “economic”) circumstances of any individual or society. It also provides an explanation of the libertarian preference for market society that is independent of social analysis from an ethical or moral point of view. The significance of the market society is that it is a technique or method for conducting social interaction without engaging in interpersonal action. As market society evolves and expands—beginning with the simple posting of prices, evolving to the introduction of mechanical and electronic vending machines, and evolving further to electronic commerce—the individual is ever more enabled to conduct social exchanges without engaging in interpersonal action. As the market evolves and expands, methods of social interaction that do not require interpersonal action evolve and expand. The individual interacts with posted prices, with automated vending machines, and with computer technology.

From an objective point of view (from the point of view of an observer of the market as a whole), the individual (A) who interacts with market technology engages in social interaction, because other people (B) come into contact with this same technology at an earlier or later time. At some point in time, person B posts the price that actor A now observes; at some point in time, person B re-fills the vending machine that actor A now uses; at some point in time, person B fulfills the Internet order that actor A now places. However, from the point of view of actor Aat the time of his action, each of these transactions or interactions may be conducted without reference to the mind or consciousness of another person. In one sense (in the objective sense) the actor who interacts with market technology is engaged in social interaction. In another sense (in the subjective sense) the actor who interacts with market technology is not engaged in social interaction; he interacts with an inanimate object. The significance of market society is that it is a technique for engaging in social interaction without engaging in interpersonal action. And this is the basis for the libertarian preference for the market society. Market technology—the price system, automated transactions, electronic communications and transactions, etc.—is a method by which an individual may avoid the dissatisfaction or unhappiness inherent in interpersonal action while still enjoying the benefits of social interaction and social exchange.

B.

Interpretation continued

The theory does not imply that one ought or ought not engage in interpersonal action. Instead, it implies that the libertarian preference for market society has a basis in the categories of consciousness (categories of action). Referring to the categories of his consciousness, an actor may come to associate various actions with a given category of action. For example, an actor may associate the action of eating ice cream with satisfaction or happiness, while the same actor may associate the action of interacting with another person (interpersonal action) with dissatisfaction or unhappiness.

It is not maintained that an actor must associate any particular kind of action with a particular category of action; it is only maintained that he may do so. If conscious actors do indeed make these kinds of associations, this may explain why they choose or prefer some methods of social interaction over others, and why they believe that some developments in society constitute “progress” while other developments in society constitute “decline” or “decay.”

If a person associates interpersonal action with dissatisfaction or unhappiness, and if he associates methods of social interaction that do not entail interpersonal action with satisfaction or happiness, then he may interpret a situation in society in which market technology is expanding as “social progress,” and he may interpret a situation in society in which market technology is contracting as “social decay” or “social decline.”

Our thesis is that the phenomenon we have historically referred to as “market society” or as the “evolution of market society” is the development of forms of social interaction that do not require interpersonal action. According to this interpretation then, the phenomenon of prices (“market prices”) is a historical example of this development and evolution, but not an essential characteristic of it. The introduction or emergence of prices (“the price system”) was, according to our interpretation, one concrete historical instance of a broader phenomenon: the development and evolution of forms of social interaction that obviate the need for interpersonal action.

From this point of view, the significance of prices is not their role in allocating goods and services spatially and temporally among various people. Rather, the significance of prices is to be seen in the role they play in the consciousness of the actor who posts or observes a price. The one who posts a price may do so without engaging in interpersonal action. Similarly, the one who observes a price may do so without engaging in interpersonal action. The written price thus enables social interaction to occur without interpersonal action. Seen in this light, the “price system” is a historical example of a broader evolutionary process in which forms of social interaction are developed that obviate the need for interpersonal action. From this point of view, the price system is not significant because its utilization leads to greater material well-being. Instead, the price system is significant because the actor who employs it as a method of social interaction may consider it more personally satisfying than “direct” interpersonal action. The actor may associate the written price, qua perceptual object, with the category of satisfaction, and he may associate the mind of another person, qua nonperceptual presence, with the category of dissatisfaction. The actor may therefore tend to choose social interaction via the price system as it seems to him personally satisfying, and he may tend to avoid social interaction via interpersonal action as it seems to him personally unsatisfying.

C.

Interpretation of Social Evolution

A recurring theme of libertarian social theory is the relationship between the self-interested actions of individuals, the expansion of market phenomena, and the improvement in mankind’s condition.

Consider Adam Smith’s invisible-hand metaphor:

As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. (AS-456)

The individual, pursuing only his own gain, unintentionally also “promotes the public interest.” If we consider Carl Menger’s explanation of the origin of money, the same notion is present:

As each economizing individual becomes increasingly more aware of his economic interest, he is led by this interest, without any agreement, without legislative compulsion, and even without regard to the public interest, to give his commodities in exchange for other, more saleable, commodities, even if he does not need them for any immediate consumption purpose. With economic progress, therefore, we can everywhere observe the phenomenon of a certain number of goods, especially those that are most easily saleable at a given time and place, becoming, under the powerful influence of custom, acceptable to everyone in trade, and thus capable of being given in exchange for any other commodity. These goods were called “Geld” by our ancestors, a term derived from “gelten” which means to compensate or pay. Hence the term “Geld” in our language designates the means of payment as such.(POE-260)

Both of these passages conceive a relationship between self-interested individual action and some economic or market-related benefit to society. In Smith’s case, the benefit is the increase in the revenue or capital of society, and in Menger’s case, the benefit resulting from self-interested individual action is the emergence and evolution of money. The two essential components of this kind of theory are: 1) the concept of individual, self-interested action, and 2) a social benefit that results from this self-interested action but which was not the intention of the actor performing the action. Mises too provides an account of social evolution based on self-interested action:

The task with which science is faced in respect of the origins of society can only consist in the demonstration of those factors which can and must result in association and its progressive intensification. Praxeology solves the problem. If and as far as labor under the division of labor is more productive than isolated labor, and if and as far as man is able to realize this fact, human action itself tends toward cooperation and association; man becomes a social being not in sacrificing his own concerns for the sake of a mythical Moloch, society, but in aiming at an improvement in his own welfare. Experience teaches that this condition—higher productivity achieved under the division of labor—is present because its cause—the inborn inequality of men and the inequality in the geographical distribution of the natural factors of production—is real. Thus we are in a position to comprehend the course of social evolution. (HA-160)

For Smith, the individual, in increasing the value of his capital, unintentionally increases the revenue of society. For Menger, the individual, in trading for more marketable goods, unintentionally fosters the development of money. For Mises, the individual, in recognizing the higher productivity of his labor under the division of labor, is led to intensify association and social cooperation. Thus, an important focus of libertarian social theory is the relationship between individual action and the evolution of the market. The question is: what factors within the conscious field of the individual actor steer him toward those actions that constitute the market? The present theory suggests an answer to this question that is independent of historically-conceived market phenomena such as capital, labor, revenue, money, productivity, division of labor, interest, etc.

D.

The Relationship between the Theory of Interpersonal Action and Libertarian Social Theory

One of the central concerns of libertarian social theory, as distinct from libertarian economics, is the use of coercion in social exchange. Coercion as we define it is distinct from other forms of harm such as violence, assault, and aggression. By “coercion” we mean a specific kind of trade or exchange. When I coerce someone, I take something (X) away from another person (or threaten to do so), with the intention of offering X back to that person in an exchange for something I want. In the prototypical coercive exchange, I point a gun at another person (B) and exclaim: “Give me Y or I’ll shoot.” My goal in such an exchange is to obtain Y by offering X (in this case, B‘s well-being) to person B in exchange. As I believe that B already has X (as I believe B already has his well-being), I take X away from B, or threaten to do so, and then offer X back to B in exchange for Y, my ultimate goal. This is the universal form of the coercive exchange.

The coercive exchange is central to libertarian social theory because it is the primary means by which nonlibertarian society prevents libertarian society from emerging. Libertarian society is not prevented by daily acts of violence against libertarians. Libertarian society is prevented by means of coercive exchanges. The nonlibertarian (A) wants Y (generally, for the libertarian to obey all the rules of nonlibertarian society). The libertarian (B) wants X (generally to avoid physical harm and imprisonment). As A believes B already has X (i.e., as the nonlibertarian believes that the libertarian is not currently suffering harm and/or is not currently imprisoned), A threatens to take X away from B, and then offers X back to B in exchange for Y. Thus, nonlibertarian society is maintained, and libertarian society prevented, by means of coercive exchanges.

To conduct a coercive exchange, I must locate, in the field of my consciousness, another being possessing the same categories of consciousness as myself (i.e., an entity “possessing” the categories of happiness/unhappiness, pleasure/pain, satisfaction/dissatisfaction, etc.). Knowing how these categories function in my own consciousness, I intend to apply this knowledge toward the manipulation of these same categories in B‘s consciousness, in order to attain some goal of mine. To do so, I must locate within the field of my consciousness, being B, a being in possession of the same consciousness categories I possess. The “locating” or “appearance” of another consciousness B, within the field of my own consciousness, is the essential characteristic of (is our definition of) interpersonal action. And thus, for me, A, the means of coercion necessarily requires interpersonal action. To conduct a coercive exchange I must locate another consciousness (another consciousness must “appear”) within my conscious field.

(It is important to remember that we are here referring to a subjective and not an objective “location” of another consciousness. In our meaning, I “locate” another consciousness not by ascertaining the spatial coordinates of another human body; rather I “locate” another consciousness in the subjective sense when another consciousness appears in some part of my conscious field. Furthermore, the other consciousness does not appear to me in the observational sense just as the back of the wall does not appear to me in the observational sense. The other consciousness appears as an unperceived presence, i.e., as something co-present with my current perceptions, observations, or sensations.)

To the extent I socially interact via market technology (as distinct from interpersonal action), another consciousness does not appear within my conscious field. As coercion requires the appearance of another consciousness within my conscious field, social interaction via market technology precludes coercion in the subjective sense (i.e., when I’m interacting with a written price, with a vending machine, or with a computer, I am not engaged in interpersonal action, and thus, not engaged in coercion in the subjective sense). An expansion of social interaction via market technology implies a correlative contraction in interpersonal action, the prerequisite or necessary condition of coercion.

The present theory provides a new insight into the relationship between the market on the one hand, and the notion of “coerced” versus “uncoerced” exchanges on the other hand. How is the market related to the diminishment of coerced exchanges? Our answer is that in a market exchange the coerced/uncoerced distinction does not apply because we define market exchange as social interaction that does not entail interpersonal action. Thus, social interaction via market technology tends to diminish coercive exchanges because in a market exchange there is no interpersonal action and therefore coercion, as we define it, cannot occur. Expansion of the market system diminishes coercive exchanges by replacing interpersonal action with forms of social interaction that do not entail interpersonal action, and in which therefore, the phenomenon of coercion cannot arise.

KEY

AS – Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, 1981

The discipline that Ludwig von Mises named praxeology derives from Carl Menger’s conception of “exact science” or “exact research.” For one interested in studying praxeology, Carl Menger’s Investigations into the Method of the Social Sciences is required reading. In Book 1, Chapters 1-5, Menger lays out his conception of scientific laws in terms of two kinds of regularities: exact laws and empirical laws.

The types and typical relationships (the laws) of the world of phenomena are not equally strict in all cases. A glance at the theoretical sciences teaches us rather that the regularities in the coexistence and in the succession of phenomena are in part without exception; indeed they are such that the possibility of an exception seems quite out of the question. However, some are such that they do indeed exhibit exceptions, or that in their case exceptions seem possible. The first are called laws of nature, the latter empirical laws.

The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which commonly are called “laws of nature,” but more correctly should be designated by the expression “exact laws.”

…exact research solves the second problem of the theoretical sciences: the determination of the typical relationships, the laws of phenomena. The specific goal of this orientation of theoretical research is the determination of regularities in the relationships of phenomena which are guaranteed to be absolute and as such to be complete.

[Exact science] arrive(s) at laws of phenomena which are not only absolute, but according to our laws of thinking simply cannot be thought of in any other way but as absolute. That is, it arrives at exact laws, the so-called “laws of nature” of phenomena.

Mises’s concept of praxeology consists of two primary components. The first component is the assumption of action, which means the assumption that a conscious actor attempts to replace the situation that confronts him/her with a (hopefully) more satisfactory situation. The second component is the notion of “exactness” or “apriority” or “certainty.” This means that praxeology is only concerned with those things that must necessarily occur when an actor attempts to replace one situation with another, not with those things that may or may not occur. In other words, praxeology is concerned with exact laws (not empirical laws) as applied to the actor’s attempt to change his/her current situation to something more satisfactory.

If I walk toward a location (action A), I may or may not arrive there (result or consequence B), and thus the relationship between my action and its result in this case is an empirical or nonnecessary relationship. On the other hand, if I walk toward a location (action A), I necessarily walk away from a different location (result or consequence B), and thus the relationship between my action and its result in this case is an exact or necessary relationship. The focus of praxeology is this latter type of “exact” relationship. As Mises writes:

To better understand the term thymology, let us go back fifty or sixty years to the time when Mises was writing Human Action, Theory and History, and The Ultimate Foundation of Economic Science. In these and other works Mises had put forth his concept of human action:

In an a prioristic science, we start with a general supposition—action is taken to substitute one state of affairs with another…The aim of action is to substitute a state of affairs better suiting the men taking the action than the previous situation. (FM, p. 16-17)

Though Mises’s conception of action is general in nature, and though his conception of action provides a foundation for studying all types of actions, as an economist, Mises was concerned with only one kind of action: the so-called “catallactic actions”—those actions based on monetary calculation.

…the field of catallactics or of economics in the narrower sense is the analysis of the market phenomena. This is tantamount to the statement: Catallactics is the analysis of those actions which are conducted on the basis of monetary calculation. (HA, 3rd rev. ed. p. 234)

In Human Action, Mises lays the foundation of his economics in terms of the concepts of action and praxeology (the famous “first two hundred pages of Human Action”). Once this is accomplished, the remainder of Human Action then deals with “catallactic actions”—generally, actions in which the actor takes account of market prices:

There have never been any doubts and uncertainties about the scope of economic science. Ever since people have been eager for a systematic study of economics or political economy, all have agreed that it is the task of this branch of knowledge to investigate the market phenomena, that is, the determination of the mutual exchange ratios of the goods and services negotiated on markets, their origin in human action, and their effects upon later action. (HA, 3rd rev. ed. p. 232)

We may conceive that economics is the study of those actions in which the actor may obtain a supply or relinquish from a supply (or stock) of identical units. The law of marginal utility, the central law of Austrian economics, is concerned exclusively with such actions. Economics, the study of the money economy, is based on the assumption of identical monetary units. The law of returns, another important economic law, utilizes simple mathematical equations (p/c, 3p, p > q, p-1, etc.) based on the assumption of identical units of stock or supply. Economics deals with action under the conditions of identical units of supply. The assumption of identical, countable, units of supply, implies the application of simple or complex mathematical equations. For example, in explaining the law of marginal utility, Mises employs the simple mathematical equation n-1.

Thus, economic science is focused on a relatively narrow range of human actions and many important kinds of actions are outside the scope of economics proper. Two of the most important kinds of actions not treated by economics are mental actions (actions such as thinking, choosing, deliberating, contemplating, reasoning, etc.) and interpersonal actions (actions involving the mind of another, second actor).

If we look back upon the Austrian economics literature of the last fifty years, there is very little mention of these other important realms of action, and little realization that these realms of action could constitute new fields for praxeological study. For example, on the subject of mental actions we have, from Mises:

…thinking itself [is] an action, proceeding step by step from the less satisfactory state of insufficient cognition to the more satisfactory state of better insight. (HA, 3rd rev. ed. p. 99)

If, for example, I think of a chair, my mental action is not a picture of the chair found in my mind. What my mind does is to think of an object. Thinking is an action, a mental “doing” as it were. (GOR96, p. 5)

These passages apparently constitute the Austrian literature on the subject of mental actions some sixty years after the publication of Human Action.

The failure to recognize realms of action outside the scope of economic science has, obviously, greatly inhibited the advance of praxeology. As mentioned, there has been almost no praxeological study of mental actions, and most libertarians and Austrians chose to approach the realm of interpersonal action as a normative, not a praxeological, discipline. Rather than trying to conceive scientific or exact laws that apply when one actor acts toward another, they tried to prove that various actions are just or unjust, good or bad, moral or immoral, etc.

And this leads us to our current topic, thymology. Because there was no recognition of realms of action outside the scope of economics, praxeological study of other forms of action was necessarily inhibited. Because there has been virtually no praxeological study of mental actions, our understanding of the relationship between praxeology and thymology has not improved over the last sixty years. To see how this is so, let’s take a straight-forward description of thymology from The Ultimate Foundation of Economic Science:

[Thymology] deals with the mental activities of men that determine their actions. It deals with the mental processes that result in a definite kind of behavior, with the reactions of the mind to the conditions of the individual’s environment. (p. 48)

This description of thymology seems reasonable enough. On the one hand there are the actions that individuals will undertake or perform. On the other hand, there are the mental activities and processes that precede or determine these actions. This seems to be a perfectly natural and reasonable description. However, we have to remember that Mises’s description and conception of thymology was formulated before there was any meaningful literature on the subjects of mental or interpersonal actions. Mises is writing in an intellectual atmosphere in which there has been no serious praxeological scholarship concerning mental actions.

Because there is no praxeological scholarship available to Mises on the subject of mental actions, his knowledge in this area is deficient and incomplete. He thus conceives “the mental activities and processes that that result in a definite kind of behavior” as something other than action. Because Mises doesn’t have a clear or firm conception concerning mental actions, he conceives mental actions (mental “doings” as it were) as phenomena essentially different from the actions that follow these mental doings. He fails to see clearly that “mental doings” are simply actions of a certain kind.

Once we conceive that mental activities and mental doings are actions, we can see that in referring to thymology, Mises is referring to the content of mental actions.

In speaking of thymology, Mises is explicit in identifying thymology with mental phenomena. He doesn’t yet think of mental phenomena as mental actions because as an economist all his time has been spent focusing on catallactic actions. He hasn’t had time to intensively ponder the nature of other forms of action such as mental actions and interpersonal actions. What he does is to contrast thymology with praxeology. Since praxeology is concerned with the universal aspects of conduct, thymology, as contrasted to praxeology, cannot be concerned with the universal aspects. If the focus of thymology is mental activities, but not their universal aspects, then the focus of thymology in the Misesian conception must be the contentual, concrete, nonuniversal aspects of mental activities. Mises’s conception of thymology is what we would today refer to as the study of the contentual, empirical, or nonnecessary aspect of mental actions; those aspects of mental activity that are not necessarily present in every instance of mental activity.

Mises, without the benefit of any parallel scholarship concerning mental actions, conceived or implied that mental activity is something different from action, and he thus conceived thymology as a discipline concerned with a kind of non-action realm of human activity. By contrast, once we conceive mental doings as actions, and given that praxeology studies the universal aspects of these actions, we can see that Mises’s conception of thymology is largely identical to the study of the concrete, individual, and historical aspects of mental actions. These and other insights can only come about upon the realization and recognition of forms of action aside from those studied by economics.

As a closing example, let’s take one of Mises’s descriptions of thymology from Theory and History:

The very act of valuing is a thymological phenomenon. But praxeology and economics do not deal with the thymological aspects of valuation. Their theme is acting in accordance with the choices made by the actor. The concrete choice is an offshoot of valuing. But praxeology is not concerned with the events which within a man’s soul or mind or brain produce a definite decision between an A and a B. It takes it for granted that the nature of the universe enjoins upon man choosing between incompatible ends. Its subject is not the content of these acts of choosing but what results from them: action. (p. 271, emphasis added)

First, Mises states that the subject matter of praxeology is not the content of acts of choosing. He thus holds that there are acts of choice that have concrete content. This implies, as has been argued, that Mises’s conception of thymology refers to the content of mental acts (mental actions) such as valuing, choosing, etc.

Second, the fact that Mises here refers to “acts of valuing” and “acts of choosing” is further corroboration that “events which within a man’s soul or mind or brain produce a definite decision” are to be conceived as actions.

Third, Mises writes that “praxeology and economics do not deal with the thymological aspects of valuation” (i.e., with the content of acts of valuation). This is consistent with a conception in which praxeology does deal with the praxeological aspects of valuation, which of course implies that valuation, as a mental activity, is an action.

Once we establish the conception of mental actions, then thymology, as distinct from praxeology, can be one of, or a combination of, the following disciplines:

1. Study of the content of mental actions. (Mises’s original conception)

2. Study of the content of actions generally (not merely the study of the content of mental actions).

3. Study of a number of actions in sequence (e.g., the effect that one actor’s action has on the action of another actor, or the effect that an actor’s action has on a subsequent action of his/her own).

Definitions 2 and 3 derive from the idea to conceive thymology negatively in relation to praxeology. I.e., thymology defined as the study of the nonpraxeological aspects of action.

THE A PRIORI

One of the unsettled problems of Austrian economics concerns the nature of the a priori and a priori knowledge. The question is whether a priori knowledge refers primarily to the relationship between concepts or to the relationship between phenomena that may be experienced by a human consciousness. The solution to this problem is important for praxeology because praxeology claims to seek, or claims to be based upon, a priori knowledge.

There can be little doubt that the aim of praxeology is to establish an “exact” or “necessary” relationship between two nonidentical phenomena A and B, such that the successful production of phenomenon A must necessarily also bring about phenomenon B. As Mises writes:

The starting point of experimental knowledge is the cognition that an A is uniformly followed by a B. The utilization of this knowledge either for the production of B or for the avoidance of the emergence of B is called action. The primary objective of action is either to bring about B or to prevent its happening. (UF, p. 20)

The primary aim of praxeology is not merely to establish necessary relationships between concepts or ideas, but to discover the necessary results or consequences of the actions that we undertake. For example, central to Mises’s conception of the Austrian Theory of the Business Cycle is the notion that the results (B) of manipulating the market rate of interest (A) must necessarily occur. Mises holds that the essential relationships underlying economics, as a branch of praxeology, are “exact” and not “empirical” relationships. Mises says: “If you do A, the occurrence of B is unavoidable.” However, the precise nature of this a priori or exact knowledge is problematic on an epistemological level, and this can be easily seen by considering a passage in which Mises touches on the essential problem:

For example, we deduce from our theory that when the price of a commodity rises (A), its production will be increased (B). However, if the expansion of production necessitates new investment of capital, which requires considerable time, a certain period of time will elapse before the price rise brings about an increase in supply. And if the new investment required to expand production would commit capital in such a way that conversion of invested capital goods in another branch of production is altogether impossible or, if possible, is so only at the cost of heavy losses, and if one is of the opinion that the price of the commodity will soon drop again, then the expansion of production (B) does not take place at all. (EP, p. 163)(italics, bold, and A’s and B’s have been added)

We can see that Mises is here describing praxeological theory. He is speaking about a deduced (not an inductive) relationship between two nonidentical phenomena, A and B. Mises’s clear meaning is that if A happens B must also necessarily happen. However, we can see that Mises writes near the end of the passage that it is possible that A may happen and yet B may “not take place at all.” This is obviously a shortcoming in the theory. If upon A’s occurring, phenomenon B may or may not take place, then we must write:

…when the price of a commodity rises (A), its production might be increased (B).

If upon A’s occurrence, B may or may not occur, this constitutes a contingent and not a necessary relationship. We are now describing an empirical law and not an exact law.

Let’s consider Mises’s definition of a priori knowledge:

But the characteristic feature of a priori knowledge is that we cannot think of the truth of its negation or of something that would be at variance with it.

If we qualify a concept or a proposition as a priori, we want to say: first, that the negation of what it asserts is unthinkable for the human mind and appears to it as nonsense…(UF, p. 18)

By this standard then, the relationship between the increased commodity price (A) and the increase in production of the commodity (B) cannot be an a priori relationship, because Mises himself has provided an explanation of how A could happen without the occurrence of B. If the relationship between A and B were an a priori relationship, it should, according to Mises, be impossible for the human mind to think of A happening without B also happening. The idea that A could happen and not B should be unthinkable for the human mind and appear to it as nonsense.

This theoretical problem was the basis for Hayek’s claim that Mises was wrong to hold that market theory is a priori. Hayek believed that Mises was wrong to hold that there can be exact laws or a priori knowledge concerning market processes. He argued that market theory can only be empirical (can only deal in contingent, nonnecessary relationships).

To see the problem from a different angle, let us return to the notion of mental actions. Mises’s contemporary Alfred Schutz wrote in passing about the action of observation:

For it is obvious that an action has only one subjective meaning: that of the actor himself. It is X who gives subjective meaning to his action, and the only subjective meaning begin given by F and S in this situation are the subjective meanings they are giving to their own actions, namely, their actions of observing X. (PSW, p. 32)

Thus, “observation” is an action; it is something an actor may consciously or purposely do. I can apply the notion of ‘observation as an action’ to Mises’s passage above in the following way. I imagine that I observe an increase in a commodity price (act of observation A). I then assume that a period of time elapses after which I attempt to observe whether production of this commodity has been increased as predicted by theory. I can only do so by means of a separate act of observation B. However, in Mises’s conception, the concrete content of two separate actions—the relationship between the content of one action and the content of a second action—lies outside the scope of praxeology. Only the pure, universal form of action is the object of praxeological study, not the different contents of various actions.

If we assume that the commodity price increase (A) and the increased production of the commodity (B) are not part of a single action, then their respective occurrences must take place in the context of two separate actions, and praxeology does not treat the relationship between two actions.

A commodity price increase and an increase in a commodity’s production are obviously not identical phenomena. These phenomena differentiate the actions in which they occur. They are not universal features of each and every action, but rather concrete contents of specific actions. Thus, these two phenomena, as contents of specific actions, lay outside the scope of praxeology proper.

What conclusions may we draw from these considerations? In the attempt to conceive exact laws of human action, we should perhaps bring more focus to bear on those regularities in which A and B are part of the same action. When I walk toward a location (conscious action A), I necessarily walk away from a different location (exact or a priori result B). The necessary relationship in this case is due to the fact that A and B are considered part of the same action with no conceived temporal separation between them.

Part of the solution lies in a conception of action that does not equate action with physical movement, but instead identifies action with the intention of the actor. The intentional conception of action, especially as explained by Friedrich Hayek in his essay “The Facts of the Social Sciences,” and by John Searle in his book Minds, Brains and Science, is the key to a deeper understanding of human action and the intentional nature of consciousness.

The Content of Conscious Action Contrasted to the Form of Conscious Action (the a posteriori and the a priori)

The focus of praxeology is exact laws of conscious action. A law is a regularity in the association of two nonidentical phenomena, A and B, such that when A happens or occurs, B happens or occurs. Following Menger we distinguish between two fundamental types of regularities—exact laws and empirical laws:

The types and typical relationships (the laws) of the world of phenomena are not equally strict in all cases. A glance at the theoretical sciences teaches us rather that the regularities in the coexistence and in the succession of phenomena are in part without exception; indeed they are such that the possibility of an exception seems quite out of the question. However, some are such that they do indeed exhibit exceptions, or that in their case exceptions seem possible. The first are called laws of nature, the latter empirical laws. (I-50)(note: laws of nature for which no exception seems possible Menger terms “exact laws”)

Eddington terms a “law of nature” a “regularity which we have found in our observational knowledge, irrespective of its source.” (PPS-67) When he writes “irrespective of its source,” Eddington means the regularity as such, regardless whether we interpret the regularity as a regularity of objective nature or as a regularity that is a function of our “intellectual equipment” used in observing nature.

In physical science, the regular relationship in question is that between (A) an observational procedure and (B) the results of that observational procedure:

Clearly a statement cannot be tested by observation unless it is an assertion about the results of observation. Every item of physical knowledge must therefore be an assertion of what has been or would be the result of carrying out a specified observational procedure. (PPS, 9-14)

As an observational procedure we might imagine the arrangement of equipment to various technical specifications, the initiation of some chemical or electrical process, and the observation of the results of having done these things; either direct observation, or observation of the readings of a measuring device. Regardless of the specific observational process, the universal form of such a process will be:

Do A, and you will observe B.

Or

Do a, b, and c, and you will observe d.

The procedure involves specifying a series of activities (A) and the results (B) that will be observed if those activities are performed.

Of course, in the theory of action a procedure is simply another name for an action or a series of actions. A procedure is simply a specific or defined intentional activity or series of intentional activities. Thus, when we say that physical knowledge involves a relationship between an observational procedure and the results of that procedure, we are saying that physical knowledge involves a relationship between a specified action (or series of actions) and the result of that action. If this is correct, then economics in its common meaning is similar to physical science in its attempt to ascertain the results of various “economic actions”—actions having to do with the money economy. For example, economics is interested in the relationship between (the action of) currency creation on the one hand, and the resultant effect on prices on the other hand. Or, economics is interested in the relationship between (the action of) interest rate manipulation on the one hand, and boom and bust cycles on the other hand. Both currency creation and interest rate manipulation are “procedures” in the general sense of the term. Both of these activities, as with the procedures of physical science, may be defined or specified such that they may reproduced or repeated by ourselves or others. When we are in possession of the definition of currency creation or interest rate manipulation, we are thus enabled to identify this activity when it occurs in spatial nature (i.e., we can locate a person(s) who is doing this activity, and a time and place where this activity is being performed or has been performed). The point is that with regard to the general knowledge form “activity A leads to result B,” physics (Eddington’s description of it) and economics (in its common meaning) are identical. Both physics and economics treat the relationship between a specified procedure or action and the results of that procedure or action.

When speaking of the results of various activities in the common understanding, there are at least two things that are not meant by “results.” First, when we speak of the results of an activity, we do not mean the “co-present” results of an activity. I.e., we do not mean by “results” some phenomenon B which occurs cotemporaneously with the given activity A. In the common understanding, when we say “results” we mean the “and then” results: first do a, then do b, then do c, and thend will result. Simply stated, by “results” we mean the time-separated consequence B, of the temporally prior action or procedure A.

Second, when we speak of results, and especially of observed results, we mean that the time-separated result (B) is in some sense independent of the observational or intellectual “equipment” (OE) such that the presence of OE does not guarantee the presence of B. For example, we might instruct: “Walk to the top of that mountain and look down into the valley. [The result is] you will see an olive grove.” By contrast, we would not instruct: “Walk to the top of that mountain and look down into the valley. [The result is] you will experience extended space.” (Here we assume for illustrative purposes that experiencing extended space is part of the activity of looking.) By “result” B we commonly mean an assumed act of observation in which B may or may not “present” (in which B may or may not appear or take place). By “result” B we do not mean a thing X that must be present in any observation because it is part of the activity of observing. As another example, let’s assume that the specified result B of some activity A has to do with market prices. We might then instruct: “Read the report and [the result is] you will see that prices have increased.” We would not instruct: “Read the report and [the result is] you will experience differentiated perceptions.” (Assuming for illustrative purposes that conscious activity generally entails differentiated perceptions.) When we speak of “results” in the common meaning, we mean something X that may or may not be part of the conscious activity in question, not something that by its nature must be part of every conscious activity.

It seems that if we define “results” a priori so as to exclude 1) the co-present aspects of any conscious activity, and 2) those aspects of consciousness necessarily entailed in verifying the results of any conscious activity, that we have thereby defined “results” as the a posteriori, or contingent, or empirical, aspect of any conscious activity. If the notion of “result” is defined in this way, then there can be, by definition, no a priori or necessary results of any conscious activity. Thus, an understanding of what we mean by the “results” of an activity is important. There can be no a priori knowledge if by knowledge we mean exclusively the a posteriori aspects of any conscious activity.

If we consider again Eddington’s definition of physical knowledge:

Clearly a statement cannot be tested by observation unless it is an assertion about the results of observation. Every item of physical knowledge must therefore be an assertion of what has been or would be the result of carrying out a specified observational procedure.

We can see how important the precise meaning of “results” is. It seems clear that the common conception of physical knowledge does not refer to the co-present (non-time-separated) features of physical-scientific procedures. Nor does it refer to those features of consciousness that are necessarily entailed in verifying the results of physical-scientific procedures. If this is correct, then the common definition of physical knowledge (which many consider identical to “scientific” knowledge) may be identical to the common definition of a posteriori (or contingent or empirical) knowledge.

Eddington’s proposition is that the fundamental physical laws are a priori:

All the laws of nature that are usually classed as fundamental can be foreseen wholly from epistemological considerations. They correspond to a priori knowledge, and are therefore wholly subjective. (PPS-57)

However, if we define physical knowledge in terms of the results of observation, and if our definition of “results” is identical to our definition of a posteriori knowledge, then we have defined physical knowledge as a posteriori knowledge. Eddington’s conception of physical knowledge is then in logical conflict with his contention that the fundamental physical laws (a kind of physical knowledge) are a priori. In other words, as indicated previously, Eddington’s definition of physical knowledge excludes the possibility of physical knowledge being a priori. If there are fundamental a priori laws (for example, a priori laws of consciousness), these laws cannot be physical laws if we accept Eddington’s definition of physical knowledge as the a posteriori aspects of conscious scientific activity.

When we turn our attention to economics as a branch of praxeology, these same principles apply. Let’s assume we assert that doing A will result in B (e.g., doing A will result in a slump, or a boom, or in an increase in prices). We then exclude from our definition of “results” 1) the co-present, cotemporaneous, aspects of action A, and 2) those elements of consciousness necessarily entailed in any cognition, perception, or observation of B. We have thus defined “results,” negatively and indirectly, as the a posteriori aspect(s) of activity A. In defining “result” exclusively in terms of the a posteriori, we guarantee that the science studying the relationship between actions and their results will be an a posteriori (empirical) one.

Five of my books are currently available in eBook format and may be downloaded for free from the following retailers and distributors:

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The five books currently available are: Praxeology and the Rothbardians (2012), A Preliminary Critique of Hans-Hermann Hoppe’s Argumentation Ethics (2007, revised 2013), Hayek and Praxeology (2013), Some Thoughts on Praxeology, Thymology, and the A Priori(2014), and Introduction to the Theory of Interpersonal Action (2014).

One of the most important factors that inhibited the study of praxeology for the last sixty years was Hayek’s argument that praxeology is inapplicable to the study of market phenomena. Hayek’s argument against praxeology (which he called the “Pure Logic of Choice”) is relatively simple. The Pure Logic of Choice, as Hayek understood it, entails an analytical relationship between 1) the object of an actor’s action, and 2) the actor’s action. Here is the key passage from Hayek’s essay “The Facts of the Social Sciences.”

From the fact that whenever we interpret human action as in any sense purposive or meaningful, whether we do so in ordinary life or for the purposes of the social sciences, we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons, there follow some very important consequences; namely, nothing less than that we can, from the concepts of the objects, analytically conclude something about what the actions will be. If we define an object in terms of a person’s attitude toward it, it follows, of course, that the definition of the object implies a statement about the attitude of the person toward the thing. When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, that the second can be used to buy something with, and that the third can be understood—and perhaps many other things.

Hayek’s conception of praxeology or the Pure Logic of Choice is a kind of conceptual analysis. If we say the object confronting the actor is food, we can analytically conclude that the action associated with that object will be eating. If the object confronting the actor is money, we can analytically conclude that the action associated with that object will be buying or selling, etc. Thus, Hayek conceives an analytic or logically necessary relationship between 1) the object that we, as social scientists, assume confronts an actor, and 2) the action the actor will perform based on the assumption of the object that confronts that actor. The analytic relationship Hayek conceives is between an object appearing to an observed or studied actor, and the action that must, by conceptual analysis, “accompany” that object.

Hayek then makes the following point. The market is comprised of the interactions of a number of people. When we study the market, we study the relationship between of a number of people, notanindividual actor and the relationship between his action and the object of his action.

Here are the relevant passages from Hayek’s essay “Economics and Knowledge.”

I have long felt that the concept of equilibrium itself and the methods which we employ in pure analysis have a clear meaning only when confined to the analysis of the action of a single person and that we are really passing into a different sphere and silently introducing a new element of altogether different character when we apply it to the explanation of the interactions of a number of different individuals.

…the sense in which we use the concept of equilibrium to describe the interdependence of the different actions of one person does not immediately admit of application to the relations between actions of different people.

To get a clear idea of Hayek’s point, let us consider ourselves social scientists looking at a local marketplace from the top of a nearby building. We see many people in the marketplace interacting and doing various things: buying, selling, talking, eating, etc. To each of these individual actors then, we may apply the analytic principle of Hayek’s Pure Logic of Choice. If one actor has food, the action analytically associated with this is eating; if one actor has money, the action analytically associated with this is buying, etc.

But this method of analysis does not apply to the relationship between actors. If one actor has food, this doesn’t say anything necessary about the action of a second, different actor.

Thus, the Pure Logic of Choice (praxeology) does not apply to study of the market.

This argument of Hayek’s constitutes the fundamental difference between the Misesian and the Hayekian conception of economics. The fundamental proposition of Hayekian economics is that market study can only be empirical, not a priori. In other words, praxeology is inapplicable to market study:

What I see only now clearly is the problem of my relationship to Mises, which began with my 1937 article on the economics of knowledge, which was an attempt to persuade Mises himself that when he asserted that the market theory was a priori, he was wrong; that what was a priori was only the logic of individual action, but the moment that you passed from this to the interaction of many people, you entered into the empirical field. (Hayek on Hayek, p. 72)

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As Hayek’s argument against praxeology is relatively simple, so is it simple to see the flaw in Hayek’s argument. We may ask, when a marketplace is the object of the actor’s action (when the actor observes a market, or when he walks in a market, or when he buys in a market), why can’t we draw an analytical conclusion from this object of the actor’s action? Or, when a price is the object of the actor’s action (when the actor observes a price, or asks a price, or pays a price), why can’t we draw an analytical conclusion from this object of the actor’s action? In short, why can’t we arrive at analytical conclusions regarding any social object or social phenomenon or any market object or market phenomenon, by understanding them to be objects of an actor’s action, and drawing analytical conclusions from these objects as Hayek indicates?

If we assume an actor possess food, and from this we may analytically arrive at the action eating, then when the actor visits a market, why may we not analytically arrive at the action purchasing? And when the actor considers a price, why may we not analytically arrive at the action exchanging?

It would seem that Hayek’s analytical method should be applicable to the objects or phenomenon of the market, and this would constitute a kind of “a priori” analysis of the market.

Furthermore, this same procedure should be applicable to other social objects and social phenomena such as language(s), law(s), the family, etc.

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One other important aspect of Hayek’s critique should be noted. Recall that when Hayek describes the procedure of the Pure Logic of Choice, he does so in terms of a third person narrative. Hayek writes:

When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, that the second can be used to buy something with, and that the third can be understood—and perhaps many other things. (emphasis added)

Hayek here refers to a hypothetical actor whom the scientist observes or studies. The question is, what about the case when it is the social scientist himself who interacts with the object or phenomenon in question? Let’s say that the social scientist visits a farmer’s market or pays a price for something in this same market, or pays interest on a loan. Since the market, the price, the loan, and the interest, appear to the scientist as objects of his own action, what prevents the scientist from drawing analytical conclusions about action from these objects which appear to him? Is there something that obligates the social scientist to study only the relationship between the objects and actions of other people? What prevents the scientist from studying the relationship between his own actions and the objects of his actions?

Thus, there are two problems with Hayek’s critique of praxeology:

1. Hayek doesn’t explain why the Pure Logic of Choice can’t be applied to study of the market by considering market phenomena as objects of action (visiting a market, paying a price, etc.) and then drawing analytical conclusions from the concepts of those objects.

2. Hayek doesn’t explain why the social scientist can’t apply the Pure Logic of Choice to the objects of his own actions, and draw analytical conclusions about the relationship between his own actions and the objects of his actions.

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The aforementioned problems are problems in the application and understanding of Hayek’s own conception of praxeology. Above, we assume that Hayek’s conception of praxeology is valid (and is the same as Mises’s), and we simply ask “if praxeology applies to objects a, b, and c, why doesn’t praxeology apply to objects x, y, and z?” And we ask “if praxeology applies to the objects of A’s action, why doesn’t praxeology apply to the objects of B’s action?” Hayek agrees that it is possible to draw analytical conclusions from objects a, b, and c, by considering them objects of the action of actor A. We simply ask why we can’t draw analytical conclusions from objects x, y, and z, by considering them objects of the action of actor B? We’re asking why Hayek’s principles don’t apply to objects and persons besides the specific ones Hayek uses to illustrate his principles.

*******

It should be noted though, that Hayek’s conception of the Pure Logic of Choice is not identical to Mises’s conception of praxeology. Hayek’s Pure Logic of Choice is a kind of conceptual analysis. Misesian praxeology is not concerned with conceptual analysis per se; it is concerned with the formal structure of action. These two things are not the same. As Mises conceives:

Praxeology is not concerned with the changing content of acting, but with its pure form and categorial structure. (Human Action, 3rd rev. p. 47)

Thus, as soon as we differentiate the object of action “food” from the object of action “money,” (as Hayek does in the Pure Logic of Choice) we are, according to Mises, referring to the changing content of action, and have therefore left praxeology proper.

This shows that Hayek conceives praxeology differently from Mises.

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Aside from the questions about the application of Hayek’s Pure Logic of Choice, there are serious questions about the knowledge it could possibly impart.

Recall, for example, that Hayek claims:

…we can, from the concepts of the objects, analytically conclude something about what the actions will be…

Is this simple proposition necessarily true? Can we analytically conclude the action of the individual based on the concept of the object that confronts him?

If we say that an actor possesses food, does this mean that the actor will perform the action of eating? Can’t an actor possess food but not eat the food? Let’s say an actor possesses a ball. Must he throw the ball? If an actor possesses a ball, may we “analytically conclude something about what his actions will be”? The answer seems clearly to be no. Perhaps we can analytically conclude that if an actor possesses a ball, then he also possesses a sphere and an object having an internal volume. Here we have conceptual or tautological analysis, but we have not thereby established a necessary relationship between a particular object and a particular action that an actor possessing that object must perform. The study of concepts is not identical to the study of action.

*******

One of the fundamental pillars of Hayekian social thought is Hayek’s contention that study of the market cannot be a priori. But Hayek seems not to have realized the implications of his own conception of the Pure Logic of Choice. He didn’t realize that the method of logical analysis he envisioned could easily be applied to the market and its various objects and phenomena (prices, interest, etc.).

In conceiving that formal exact science is inapplicable to the study of market phenomena, Hayek’s thinking diverges not only from Mises’s, but from Menger’s as well. Menger’s Investigations into the Method of the Social Sciences is largely devoted to the proposition that formal exact science is valid in all realms of the world of phenomena, “economy” being but one realm of human phenomena. Thus, Mises’s insight that economics is only one branch of praxeology can be traced back to Menger’s vision of the “exact approach to cognition.” In his Investigations, Menger provided a definition of formal exact science, a science which Mises later termed praxeology.

The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which commonly are called “laws of nature,” but more correctly should be designated by the expression “exact laws.”

Physical science studies the objective or physical world; praxeology studies the subjective world or the world of consciousness. Understanding praxeology requires a deeper understanding of the difference between these two realms of study. As a guide to understanding the nature of physical science we will use Arthur Eddington’s The Philosophy of Physical Science, and we will contrast Eddington’s account of physical science with the fundamentally different approach taken by praxeology. Eddington’s book is important for the reason that, while his subject is physical science, he advocates the same epistemological method or epistemological approach that is the foundation of Mises’s social science. Because Eddington goes into some detail about the relationship between the epistemological approach and physical knowledge, this allows us to form a clear and distinct conception of the relationship between the epistemological approach and social or praxeological knowledge.

Eddington’s primary contention is that the laws of physics are entirely subjective in nature.

All the laws of nature that are usually classed as fundamental can be foreseen wholly from epistemological considerations. They correspond to a priori knowledge, and are therefore wholly subjective…the system of fundamental laws is wholly subjective. (p. 57)

All [the] progress [of physics] relates to subjective law. It all relates to uniformities imposed on the results of observation by the procedure of observation. (p. 62)

The subjectivity referred to in these lectures is that which arises from the sensory and intellectual equipment of the observer. (p. 85)

What Eddington refers to as the epistemological approach goes hand-in-hand with the study of laws of subjectivity.

We may distinguish knowledge of the physical universe derived by study of the results of observation as a posteriori knowledge, and knowledge derived by epistemological study of the procedure of observation as a priori knowledge. (p. 24)

The epistemologist is an observer only in the sense that he observes what is in the mind. (p. 23)

…the epistemological approach takes knowledge as the starting point rather than an existent entity of which we have somehow to obtain knowledge. (p. 3)

The traditional method of systematic examination of the data furnished by observation is not the only way of reaching the generalizations valued in physical science. Some at least of these generalisations can also be found by examining the sensory and intellectual equipment used in observation. (p. 18)

Generalisations that can be reached epistemologically have a security which is denied to those that can only be reached empirically. (p. 19)

The situation is changed when we recognize that some laws of nature may have an epistemological origin. These are compulsory; and when their epistemological origin is established, we have a right to our expectation that they will be obeyed invariably and universally. The process of observing, of which they are a consequence, is independent of time or place. (p. 20)

If we compare Eddington’s conception of the epistemological approach to Mises’s description of the foundation of praxeology, we will find a remarkable similarity of vision:

Human knowledge is conditioned by the structure of the human mind. If it chooses human action as the subject matter of its inquiries, it cannot mean anything else than the categories of action which are proper to the human mind and are its projection into the external world of becoming and change. All the theorems of praxeology refer only to these categories of action and are valid only in the orbit of their operation. (HA, p. 36)

[The problem of the a priori] refers to the essential and necessary character of the logical structure of the human mind. (HA, p. 34)

For man every cognition is conditioned by the logical structure of his mind and implied in this structure. (HA, p. 86)

For, as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind. (UF, p. 65)

The a priori sciences—logic, mathematics, and praxeology—aim at a knowledge unconditionally valid for all beings endowed with the logical structure of the human mind. (HA, p. 57)

Writing in the early 1940’s, Hayek described the epistemological approach in this way:

If we consider for a moment the simplest kinds of actions where this problem arises, it becomes, of course, rapidly obvious that, in discussing what we regard as other people’s conscious actions, we invariably interpret their action on the analogy of our own mind: that is, that we group their actions, and the objects of their actions, into classes or categories which we know solely from the knowledge of our own mind. (IEO, p. 63)

We thus always supplement what we actually see of another person’s action by projecting into that person a system of classification of objects which we know, not from observing other people, but because it is in terms of these classes that we think ourselves. (IEO, p. 63)

The claim to which I have referred follows directly from this character of the first part of our task as a branch of applied logic. But it sounds startling enough at first. It is that we can derive from the knowledge of our own mind in an “a priori” or “deductive” or “analytic” fashion, an (at least in principle) exhaustive classification of all the possible forms of intelligible behavior. (IEO, p. 67)

…when we reflect that, whenever we discuss intelligible behavior, we discuss actions which we can interpret in terms of our own mind, the claim loses its startling character and in fact becomes no more than a truism. If we can understand only what is similar to our own mind, it necessarily follows that we must be able to find all that we can understand in our own mind. (IEO, p. 68)

Let us pause for a moment and reflect on this procedure which Eddington refers to as the epistemological approach. The idea is relatively simple: in the epistemological approach, we operate on the assumption that the regularity or uniformity of phenomena is a function of our consciousness, not a function of the external or physical world. For example, let’s take the law(s) of conservation. Our cognition and experience concerning the operant laws of conservation may be interpreted in at least two ways. We may conceive that conservation “exists” in the objective, physical world, independent of any consciousness. Or, we may conceive that we experience the phenomenon of conservation due to the structure of our mind; i.e., when something (X) “happens,” we believe we will always find some counter-balancing counterpart (Y) because our mind is structured such that “happenings” always come with “counterparts”. As we’ve seen, Mises is pursuing this second approach.

The human action which is inextricably linked with human thought is conditioned by logical necessity. It is impossible for the human mind to conceive logical relations at variance with the logical structure of our mind. It is impossible for the human mind to conceive a mode of action whose categories would differ from the categories which determine our own actions. (HA, p. 25)

The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action. It is a knowledge that is our own because we are men; no being of human descent that pathological conditions have not reduced to a merely vegetative existence lacks it. No special experience is needed in order to comprehend these theorems, and no experience, however rich, could disclose them to a being who did not know a priori what human action is. The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of human action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without. (HA, p. 64)

Mises’s insight was that the regularities we intuit or experience in social phenomena are experienced as regularities due to the logical structure of the human mind by which we apprehend them. The regularities that we intuit in social phenomena, and which praxeology attempts to formulate in terms of exact laws, are experienced as regularities because our mind organizes experience in terms of mental “categories,” foremost among them the categories of ends (purposes) and means (things utilized toward purposes). Scientific laws can thus be interpreted as regularities of consciousness which exhibit the structure of our consciousness. Our task as praxeologists is to study this structure with ever more care and precision as a means to understanding the regularities in the world around us, both social and physical.

Natural science is the study of objects or states that may be observationally compared. In natural science we compare X and Y with respect to their respective attributes. Social science, by contrast, is not founded on an observational comparison of several objects or states. In social science we do not compare the attributes of two things X and Y. The foundation of social science is the relationship between an object or state (X) on the one hand, and a desire to change X to something different on the other hand. Here, there is only one entity, X, that has attributes. The focal point of social science is the relationship between X and a desire to change X to something different.

We may call the desire to change X to something different an entity, Y. Social science then is founded on the relationship between object or state X, and the desire (Y) to change X. We assume as given an observation, perception, or sensation, X. If we assume or postulate that Y—the desire to change X—is also an observation, perception, or sensation (e.g., the notion that desire is something I can feel, or the notion that desire is something that can be observed as a chemical or biological process), then a study of the relationship between X and Y is a study of two objects or states that may be observationally, perceptually, or sensually compared. Such a comparison constitutes the foundation of natural science.

On the other hand, if we assume or postulate that Y—the desire to change X—is not an observation, perception, or sensation (i.e., if we assume or postulate that Y is a nonperceptible presence), then a study of the relationship between X and Y cannot be a study of two objects that may be observationally, perceptually, or sensually compared. Such a study then cannot be natural science, but must be a different kind of study. This illustrates the epistemological or structural difference between natural science and social science.

If we assume as given perception X, and if we assume the desire (Y) to change X is a nonperceptual presence, then the concept pair object/desire conforms to the binary categorial structure previously explained. Regarding the previously discussed concept pairs: supply/demand, supply/value, means/ends, satisfaction/dissatisfaction, etc., the entities that comprise one category must be fundamentally different from the entities that comprise the other category. Only the elements of one category may have observable or perceptible attributes (may be defined in terms of sensations, perceptions, or observations). In social science, the desire to change X must be of an altogether different nature from X; the valuing of supply X must be of an altogether different nature from supply X; the end toward which means X is utilized, must be of an altogether different nature from means X, etc.

Natural science requires a plurality of observations. Its categorial structure includes, minimally, an initial observation (observation-1) and a follow-up observation (observation-2). The categorial structure of social science entails only one category of observation (only one category of perceptual or sensual data). Social science lacks the categorial structure needed for comparing a plurality of observational, perceptual, or sensual data.

Physical Concepts in Social Science

It follows directly from the epistemological difference between social science and physical science that social science cannot employ conceptions that imply (that rely on or require) a comparison of several observations, perceptions, or sensations. For example, the notion “more urgent versus less urgent” implies that two instances of urgency have been compared with respect to their intensity. The idea is that two observations, perceptions, or sensations, have occurred and have been compared, and it has been determined that in observation-1 “more” of an attribute was found than was found in observation-2. As has been argued, this comparison of several observations, perceptions, or sensations, constitutes the very foundation of natural science. An investigation founded on observational comparisons is a natural-scientific investigation, not a social-scientific one. Hayek wrote about the nonphysical nature of social phenomena in his essay “The Facts of the Social Sciences”:

…though all the social phenomena with which we can possibly deal may have physical attributes, they need not be physical facts for our purpose. That depends on how we shall find it convenient to classify them for the discussion of our problems. Are the human actions which we observe, and the objects of these actions, things of the same or a different kind because they appear as physically the same or different to us, the observers—or for some other reason?

Is it the physical attributes of the objects—what we can find out about these objects by studying them—or is it by something else that we must classify the objects when we attempt to explain what men do about them?

It is easily seen that all these [social science] concepts…refer not to some objective properties possessed by the things, or which the observer can find out about them, but to views which some other person holds about the things. These objects cannot even be defined in physical terms, because there is no single physical property which any one member of a class must possess.

What I am arguing is that no physical properties can enter into the explicit definition of any of these classes, because the elements of these classes need not possess common physical attributes, and we do not even consciously or explicitly know which are the various physical properties of which an object would have to possess at least one to be a member of a class.

The common attributes which the elements of any of these classes possess are not physical attributes but must be something else. (IEO, p. 59-62)

Social phenomena cannot be defined in physical terms. This means that social phenomena cannot be defined in terms of a comparison of the attributes of several observations, perceptions, or sensations. And this means that social phenomena cannot be defined in terms of distinctions such as internal/external, sooner/later, higher/lower, more/less, etc. Physical terms such as these imply attribute differences between several entities. The study of attribute differences between several entities constitutes the foundation of natural science. In his essay, Hayek came to the following conclusion:

…whenever we interpret human action as in any sense purposive or meaningful, whether we do so in ordinary life or for the purposes of the social sciences, we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons…

Hayek writes that we have to define the objects and actions of social science (in Hayek’s conception these are two observable entities) in terms of the opinions or intentions of the acting persons. Here, following Hulsmann, we will consider opinions and intentions to be “nonextended entities” similar in nature to value, utility, preference ranks, etc. Thus, we interpret Hayek’s insight as consistent with what we assert regarding the difference between natural science and social science. Social science does not treat the relationship between two observable (extended) entities. Social science treats the relationship between an observable entity on the one hand (Hayek’s objects and actions), and a nonobservable (nonextended) entity on the other hand (Hayek’s opinions and intentions). The relevant concept pair in this case is object/opinion or object/intention, where one category is a category of perceptual content, and the other category is a category of nonperceptual presence.